A screen showing trading of a single-stock leveraged ETF tracking Samsung Electronics on the 27th of last month. Yonhap News
Ultra-high-risk leveraged products that track the daily returns of Samsung Electronics (005930.KS) and SK hynix (000660.KS) at three times their performance will be listed on the London Stock Exchange.
According to the financial investment industry, Leverage Shares, a leveraged exchange-traded product (ETP) manager, will list a Samsung Electronics 3x leveraged ETP (SMG3, 3SMG) and an SK hynix 3x leveraged ETP (HNX3, 3HNX) on the London Stock Exchange Wednesday.
These products track the daily share price gains of Samsung Electronics and SK hynix at three times the rate. For example, if Samsung Electronics’ share price rises 5% in a single day, 3SMG climbs 15%. Conversely, if the share price falls 5%, a 15% loss occurs.
However, Leverage Shares decided not to list 3x inverse products based on Samsung Electronics and SK hynix this time. Inverse products bet on share price declines.
◇3x Leverage Blocked in Korea and U.S., Available Only in U.K.=Currently, only single-stock leveraged ETPs that track Samsung Electronics and SK hynix at twice their daily returns are listed in Korea. They were launched on Nov. 27.
By contrast, 3x leveraged products are not permitted in Korea, as financial authorities cap the maximum multiple for single-stock leveraged ETPs at two times. The U.S. likewise does not permit 3x leveraged products based on single stocks, citing excessive speculation.
For this reason, the London market is regarded among global investors as a relatively less-regulated “mecca of leverage.”
◇Korean Investors Flocked to Triple Tesla, Now Samsung and Hynix?=The market expects interest from domestic investors to grow as 3x leveraged products based on Samsung Electronics and SK hynix emerge.
In fact, the Tesla 3x leveraged ETP (TSL3) listed on the London market early last year is cited as a prominent example of large-scale buying by domestic investors.
At the time, holdings by Korean investors were reported to have reached about 80% of the total issued volume.
The industry sees significant demand for high-risk, high-return investment using Samsung Electronics and SK hynix amid continued expectations for an improvement in the semiconductor industry and projected benefits from artificial intelligence (AI).