▲ SK Hynix
Despite SK Hynix's stock price falling by nearly 8 percent, a bizarre phenomenon occurred where its single-stock leverage product surged by around 50 percent.
The Korea Exchange (KRX) announced that Korea Investment Management's "ACE SK Hynix Single Stock Leverage ETF" closed at 30,000 won today (June 8), up 49.70 percent from the previous trading day.
The price of the ETF had been on a downward trend throughout the trading session, only to suddenly spike by nearly 50 percent right before the market closed.
The SK Hynix single-stock leverage ETF is a product designed to track twice the daily performance of SK Hynix's stock price.
SK Hynix closed at 1,911,000 won, down 7.68 percent.
Under normal circumstances, the SK Hynix single-stock leverage ETF should have fallen by about 15 to 16 percent, which is double the decline of the underlying stock.
Indeed, all six other SK Hynix single-stock leverage ETFs, excluding this particular product, fell by around 15 to 18 percent.
This abnormal transaction is understood to have occurred right before the market close, a period when liquidity providers (LPs) are not obligated to submit quotes. With the bid-ask spread widened, buy orders placed by investors at market price were executed at these inflated rates.
ETFs prevent the discrepancy with their net asset value (NAV) from widening through the submission of quotes by LPs.
However, during the closing auction period from 3:20 p.m. to 3:30 p.m., LPs are exempt from their obligation to submit quotes.
During this time, for products with low trading volume and thin order books, if someone places an order at an abnormal price, it can lead to significant price distortion.
Korea Investment Management said, "We will take this opportunity to inspect our LP quoting system and do our utmost to prevent any further issues from occurring."
The problem lies with the investors who purchased the product at 30,000 won during that time.
This is because when the market opens the next day and LPs resume providing liquidity, the price will return to its original level.
If the price drops back to the 16,000 won level, which is in line with other SK Hynix single-stock leverage ETFs, investors who bought at 30,000 won will face losses of around 50 percent.
It is reported that institutional investors, rather than individual retail investors, made up the majority of those who purchased the ETF at 30,000 won.
An official from the financial investment industry said, "Looking at similar past cases, it may be practically difficult for investors to receive compensation for their losses."
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.