Financial watchdog warns of potential retail investor losses from volatile single-stock ETFs
En resumen
- South Korea's financial watchdog warned retail investors of potential losses due to extreme volatility in newly introduced single-stock leveraged ETFs.
- The underlying assets, Samsung Electronics and SK hynix, are experiencing increased volatility driven by an AI rally, amplifying risks for these ETFs.
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Por qué importa
Newly introduced single-stock leveraged ETFs in South Korea are showing extreme volatility, prompting a warning from the financial watchdog.
SEOUL, June 18 (Yonhap) -- The country's financial watchdog warned Thursday that retail investors could suffer potential losses as the newly introduced single-stock leveraged exchange-traded funds (ETFs) have been showing extreme volatility.
The Financial Supervisory Service (FSS) said underlying assets -- Samsung Electronics and SK hynix -- have been delivering increased volatility on the back of an artificial intelligence (AI)-driven rally, which in turn leads to amplified volatility for single-stock leveraged ETFs.
According to the FSS, the market capitalization of single-stock leveraged ETFs stood at 4.5 trillion won (US$2.95 billion) on May 27, when they debuted on the local stock market.
But their market value more than doubled to 9.6 trillion won on June 12.
Also, their daily turnover rate stood at 122.5 percent, far higher than 30.2 percent posted by other leveraged, inverse ETFs, according to the FSS.
The watchdog said underlying assets could show extreme volatility down the road, resulting in amplified volatility for single-stock leveraged ETFs.
Preguntas abiertas
- What specific measures will the FSS take?
- How widespread are retail investor holdings in these ETFs?
