IT Home On October 26, according to Bloomberg, two leveraged ETFs related to SK Hynix will be liquidated just a few months after being listed in the US. The reason is that market interest in AI trading trends has cooled down.
The two long and short products issued by Tradr ETF track the American Depositary Receipts (ADR) of this South Korean chip manufacturer, offering twice the daily performance or reverse performance. An announcement from the ETF issuer indicates that SKHA (2 times more) and SKHN (2 times short) will be liquidated on November 12.
This year, the stock prices of SK Hynix and its peer Samsung Electronics have fluctuated sharply, with funds flowing in and out of AI-related stocks quickly. Leveraged ETFs in Korea and other regions amplify daily fluctuations of individual stocks, further exacerbating market volatility; Korean local regulators have also tightened the regulatory rules for such products recently.
SK Hynix’s stock listed in Seoul has fallen 56% compared to its historical high. The market’s optimism about the AI boom has waned, and investors are beginning to worry that the high financing costs incurred by the company for large-scale infrastructure projects will put pressure on it.
These two Tradr ETFs went public on July 28, just a few weeks after the SK Hynix ADR entered the U.S. stock market. Many institutions such as ProShares, Leverage Shares, and Direxion have also launched similar leveraged products that are linked to SK Hynix.
Since its listing, the Tradr Two-Track SK Hynix ETF has fallen by more than 5%; the short ETF has dropped by as much as 42%. During the same period, the SK Hynix ADR rose slightly by about 5%, showing a stronger performance than the local Korean stocks.
The total assets of the two products have decreased by more than 60% compared to their peak value. The current combined amount is only approximately 1.3 million US dollars (IT Home note: at current exchange rate, it is approximately 8.681 million RMB).