"No upper or lower limits": Leveraged ETFs tied to SK hynix ADR list on U.S. market, raising volatility concerns

[Financial News] U.S. asset managers are rolling out leveraged exchange-traded fund (ETF) products aimed at SK hynix's American Depositary Receipt (ADR), which made a flashy debut on the New York stock market. As fund managers rush to launch high-risk derivatives, concerns are growing that price volatility in SK hynix ADR could intensify further.
 
According to the U.S. ETF industry on the 12th local time, at least five asset managers, including Leverage Shares, GraniteShares, ProShares and Coegi Funds, plan to list ETFs linked to SK hynix ADR on the New York stock market starting on the 13th, U.S. Eastern time.
Leverage Shares will launch a 2x leveraged ETF, ticker SKHX, and an inverse ETF, SKHZ, on the 13th, both tied to the daily price movement of SK hynix ADR.
ProShares is also expected to launch a 2x leveraged ETF, SKHU, on the same day.
GraniteShares announced that it will launch 2x leveraged ETF SKUU and 2x inverse ETF SKDD on the 14th. Coegi Funds will also introduce a 2x leveraged ETF on the 14th.
Direxion has announced plans to launch a 2x leveraged ETF, SKHL, but has not specified a date. The actual trading dates for these products may change depending on circumstances.
The reason so many managers are rushing to launch these products is seen as the strong debut of SK hynix ADR on the New York stock market.
In fact, on the 10th, SK hynix ADR closed at $168.49, up 13.08% from its offering price, drawing strong market attention.
This kind of single-stock linked product is not unique to SK hynix. U.S. ETF managers have long operated single-stock leveraged and inverse ETFs tied to major Big Tech names on the New York stock market, including NVIDIA, Alphabet Inc., Tesla and Advanced Micro Devices, Inc. (AMD).
Last month, shortly after SpaceX was listed on Nasdaq, leveraged ETF products linked to SpaceX stock were also launched one after another.
Still, some voices are expressing concern about the rush to launch these products.
The financial investment industry points out that, because single-stock leveraged ETFs track twice the daily rise and fall of the underlying asset, they can amplify price volatility as a side effect.
In particular, because the U.S. stock market has no upper or lower price limits, volatility risk could become even greater when share prices swing sharply.
Since leveraged products tied to large-cap stocks such as Samsung Electronics and SK hynix have also been cited as one of the causes of sharp price swings in the domestic market, attention is now turning to whether speculative capital from the U.S. will affect the price of the underlying shares in Korea as well.sms@fnnews.com Sung Min-seo Reporter