Southern Eastern Addresses Market Concerns Regarding the 2x Leveraged SK Hynix ETF

Huo Xing Cai Jing reports that on July 31, the South China Securities Double Long Hynix ETF recently became a market focus due to extreme price volatility. As of July 30, SK Hynix had declined by 49% from its June high, and the net asset value of the double-long Hynix product had suffered a cumulative drawdown of over 80%, with its size shrinking by approximately HK$100 billion from HK$130 billion. Following new regulations issued by the Hong Kong Securities and Futures Commission last week, on Monday, South China Securities announced that, starting August 3, its leveraged and inverse products linked to 12 popular overseas stocks—including SK Hynix, Samsung Electronics, Tesla, and NVIDIA—will fully transition to a “flexible leverage structure.” This move has raised investor concerns, as if the manager proactively reduces leverage, should SK Hynix rebound sharply, the recovery speed of the ETF’s net asset value will be significantly slower, prolonging the time for investors who bought at higher levels to break even. On the evening of July 30, South China Securities clarified market concerns regarding the planned switch to a “flexible leverage structure” and potential reduction in leverage multiples, stating that under current market conditions, the product is expected to maintain a 2x leverage ratio, and the fund manager will not make any active adjustments to the leverage multiple based on its own market judgment. South China Securities emphasized that, after the relevant changes take effect, it will issue daily announcements regarding the target leverage multiple prior to each trading day’s opening. For this product, such an announcement will be issued after the close of trading on July 31; investors are urged to pay close attention. (21st Century Business Herald)