An SK hynix advertisement is displayed on the exterior of a building in New York on Friday (local time), the first day of trading for the company's Nasdaq-listed American depositary receipts. [Reuters]
An SK hynix advertisement is displayed on the exterior of a building in New York on Friday (local time), the first day of trading for the company's Nasdaq-listed American depositary receipts. [Reuters]

Several leveraged exchange-traded funds tied to SK hynix's American depositary receipts are set to begin trading on US markets this week, just days after the ADR made a strong debut. The rapid expansion into derivatives has raised concerns that share price volatility could intensify.

According to notices from US ETF managers published Sunday (local time), at least five asset managers — including Leverage Shares, GraniteShares, ProShares and Korgi Funds — plan to launch leveraged and inverse ETFs linked to the SK hynix ADR on Monday and Tuesday (US Eastern time).

Leverage Shares will list a 2x leveraged ETF (ticker: SKHX) that tracks twice the daily return of the SK hynix ADR, along with an inverse ETF (SKHZ) that moves in the opposite direction, both on Monday.

ProShares will also debut a 2x leveraged ETF (SKHU) on the same day.

GraniteShares plans to launch a 2x leveraged ETF (SKUU) and a 2x inverse ETF (SKDD) on Tuesday. Korgi Funds will also release a 2x leveraged ETF that day.

Direxion has announced plans for a 2x leveraged ETF (SKHL) but has not disclosed a specific listing date. The actual start of trading for all products may vary depending on market conditions.

Single-stock leveraged ETFs are high-risk products designed to deliver twice the daily price movement of an underlying security using derivatives. Because compounding effects can cause returns to diverge significantly from the underlying asset over time, they are primarily used for short-term trading.

Single-stock leveraged ETFs tied to major technology names such as Nvidia, Tesla, Alphabet and AMD are already actively traded in the United States. A wave of similar products also followed shortly after SpaceX listed on Nasdaq last month.

The SK hynix ADR closed at $168.49 on its first day of trading Friday, up 13.08 percent from its offering price, drawing strong investor interest.

Market participants have expressed both optimism that leveraged ETF activity could boost ADR trading volumes and concern that it may amplify price swings. Analysts particularly note that US markets have no daily price-movement limits, meaning leveraged products could see far wider price fluctuations than their counterparts in South Korea.


sjy@heraldcorp.com