Samsung Electronics and SK hynix 2x ETF to Launch This Month..."Up to 5.3 Trillion Won in Potential Fund Inflows"

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[Financial News] As an exchange-traded fund (ETF) that tracks the daily returns of Samsung Electronics Co., Ltd. and SK hynix at twice the rate is set to launch later this month, securities analysts have projected that as much as 5.3 trillion won could flow into related products.
\r\nAccording to the investment banking industry on the 9th, Jae-hong Yoon, a researcher at Mirae Asset Securities, said in a report released on the 7th that, based on U.S. single-stock leveraged exchange-traded product (ETP) cases, inflows into leveraged ETFs tied to Samsung Electronics Co., Ltd. and SK hynix are estimated at 1.7 trillion won under a conservative scenario and 5.3 trillion won under an aggressive scenario.
\r\nHe expects demand to shift from existing investments in common shares of Samsung Electronics Co., Ltd. and SK hynix, semiconductor ETFs, and single-stock ETPs listed on the Hong Kong stock market. That would account for 85% to 88% of total inflows. New demand is projected at 12% to 15%.
\r\nYoon said, "The launch of direct trading in Korean stocks by U.S. retail investors through IBKR is a variable," adding, "The fact that separate education is required for single-stock leveraged ETFs is also expected to act as a certain hurdle."
\r\nOn the impact on supply and demand for Samsung Electronics Co., Ltd. and SK hynix, he forecast a favorable net effect, saying that "common-stock selling pressure (conservative minus 110 billion won, aggressive minus 340 billion won) and spot buying for the new ETF (conservative plus 170 billion won, aggressive plus 530 billion won) will offset each other, resulting in a favorable net impact (conservative plus 60 billion won, aggressive plus 180 billion won)."
\r\nIn the futures market, he said outflows from existing leveraged ETFs are expected, but the reflection of new inflows is likely to drive program buying and increase the risk of concentrated trading.
\r\nHe also said there is a growing possibility of capital outflows from semiconductor stocks other than Samsung Electronics Co., Ltd. and SK hynix. Yoon noted, "Given the tendency for funds to leave similar ETFs when a new ETF is listed, there is a possibility of outflows from existing semiconductor ETFs," adding, "For semiconductor stocks other than Samsung Electronics Co., Ltd. and SK hynix, there is a risk of demand shifting away due to ETFs."
\r\nMeanwhile, the Financial Services Commission (FSC) said on the 21st of last month that a revision to the enforcement decree of the Financial Investment Services and Capital Markets Act, which allows the introduction of leveraged ETFs based on single stocks, passed the State Council of South Korea. As a result, major asset managers including Samsung Group, Mirae Asset Financial Group, KB, and Korea Investment Holdings are preparing to launch single-stock ETFs.
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nodelay@fnnews.com Park Ji-yeon Reporter