SK Hynix's US listing spurs intensive rollout of leveraged products

SK Hynix’s U.S. listing is driving a new wave of leveraged products to Wall Street. Issuers including ProShares, Leverage Shares, and Rex Shares are preparing to launch double-long SK Hynix ADR products, with some also developing inverse offerings. According to information on the issuers’ websites, at least six products will launch next week. Leveraged ETFs tied to SK Hynix are extremely popular in South Korea. SK Hynix, Samsung Electronics, and their linked leveraged products together account for over 70% of South Korea’s stock market trading volume, amplifying volatility in the KOSPI index. John Cho, equity fund manager at JPMorgan Asset Management Korea, said: “Some elements of retail investor activity appear to be increasingly momentum-driven, and the growth of single-stock ETFs has boosted large-cap stock trading volume and volatility. The emergence of leveraged ETFs is not a healthy sign and may signal late-cycle retail behavior.” Analysts note that the concentration of single-stock leveraged products has begun to impact the stocks they are designed to track. The new batch of U.S.-listed leveraged ETPs means expanded daily rebalancing flows, which could exacerbate already elevated volatility.