An exchange-traded fund (ETF) that allows investment in the stock price decline of Nvidia and Tesla is being launched. This means that domestic investors can easily short individual U.S. stocks. However, since the product is listed on the Hong Kong Stock Exchange (HKSE), investors will need to open an overseas stock account to invest.
According to the financial investment industry on the 19th, Hong Kong CSOP Asset Management announced that it will launch an ETF that tracks the stock price increases of Nvidia, Tesla, MicroStrategy, and Coinbase by double, and inversely by double. For Berkshire Hathaway, only a standard double ETF will be introduced. These products will be listed on the Hong Kong Stock Exchange on the 24th.
To be listed on the Korea Exchange, an ETF must contain more than 10 assets; however, this is not the case for the Hong Kong Stock Exchange. In Hong Kong, it is possible to list an ETF with only one asset as its underlying asset. This is also the reason CSOP Asset Management launched nine products this time. Products like CSOP Asset Management cannot be listed by domestic asset management companies in the domestic market. CSOP Asset Management is the second-largest ETF operator among Hong Kong asset management companies.
The ETFs being launched will be available not only in Hong Kong dollars but also in U.S. dollars. For domestic investors, this means they only need to consider the U.S. dollar price. The Hong Kong market operates from 10:30 a.m. to 5 p.m. our time. The total fee is 2.00%, which is relatively high compared to other domestic ETFs.
These ETFs may experience a sell-out phenomenon on the first day of listing. The product structure is synthetic, where CSOP Asset Management enters into contracts with investment banks to reflect the revenue in the ETF, but from the investment bank's perspective, which needs to hedge investment risks, it cannot endlessly increase the contract size. Particularly, the hedging process for inverse leverage is more complicated. This limits the growth of the ETF's size, making it impossible for buyers to purchase when demand spikes.
CSOP Asset Management plans to launch inverse leverage products using other stocks in addition to Nvidia, Tesla, MicroStrategy, Coinbase, and Berkshire Hathaway in the future. Considering the hedging process, stocks with a market capitalization of more than $200 billion will be targeted.