A 2x leveraged exchange-traded fund (ETF) for SK hynix listed on the Hong Kong stock market has become the world's largest single-stock leveraged product by net worth. As SK hynix shares surge on expectations for growth in the artificial intelligence (AI) memory market, global money is flowing into Korea's semiconductor-related products.
According to Hong Kong Exchanges and Clearing and CSOP Asset Management on the 8th, the assets under management (AUM) of the "CSOP SK hynix Daily 2x Leveraged ETF" stood at about $5,377,820,000 (about 7.8919 trillion won) as of the 7th local time. That surpasses the net worth of "Direxion Daily TSLA Bull 1.5X Shares (TSLL)," a 2x leveraged ETF for Tesla listed on the U.S. stock market.
The product established itself as a flagship global single-stock leveraged ETF in about seven months after its listing on the Hong Kong market in Oct. last year. It is currently the only leveraged ETF in the global market with SK hynix as the underlying asset. In the first quarter of this year, it also ranked No. 1 among global single-stock leveraged and inverse ETFs by net inflows.
The product's returns are also steep. From listing to date, the return is tallied at about 750%. That far outpaces the rise in SK hynix shares over the same period. A leveraged ETF tracks twice the one-day return of its underlying asset, and when an uptrend persists for an extended period, the "compound interest effect," in which gains are reinvested, can deliver performance above a simple 2x.
The market sees expectations for increased investment in AI servers and higher demand for high-bandwidth memory (HBM) lifting SK hynix shares and concentrating funds into related leveraged products. SK hynix again hit an intraday all-time high on the day.
Money is also flowing into leveraged ETFs based on Samsung Electronics. The assets under management of CSOP's 2x leveraged ETF for Samsung Electronics stand at $1,647,820,000 (about 2.4205 trillion won), and the product recently entered the upper ranks of global single-stock leveraged and inverse ETFs. Analysts say global investors' preference for Korea's semiconductor stocks is also showing up in the leveraged product market.
Interest from domestic investors is also growing. According to Korea Securities Depository (KSD), domestic investors held about $172,110,000 (about 252.8 billion won) worth of the SK hynix leveraged ETF as of the 6th.
This trend is expected to affect the domestic market as well. At the end of this month, the domestic stock market will see the first listings of single-stock leveraged and inverse ETFs with Samsung Electronics and SK hynix as the underlying assets. Until now, launches were difficult in Korea due to restrictions on the weighting of specific stocks, but a recent amendment to the Enforcement Decree of the Financial Investment Services and Capital Markets Act has made product launches possible.