Photo : YONHAP News
Financial authorities have urged investors to exercise caution ahead of the launch of single-stock leveraged exchange-traded funds(ETFs) tied to chipmaking giants Samsung Electronics and SK hynix.
The Financial Supervisory Service issued a statement Monday emphasizing that since these products track only one stock, investors are directly exposed to the specific risks of those companies.
South Korea is set to launch its first single-stock leveraged ETFs this week, offering products linked to Samsung Electronics and SK hynix that aim to deliver twice the daily performance of the underlying shares.
Leveraged products seek to deliver twice the daily return of an individual stock, which means daily price fluctuations could reach up to 60 percent.
The regulator warned that the leveraged structure may compound losses in the event of a negative event and stressed that these products should only be considered for short-term investment.
Noting recent price swings in Samsung Electronics and SK hynix shares, authorities expressed concern that investors may engage in speculative trading without fully understanding single-stock leveraged products.