 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] A newly launched single-stock leveraged ETF in South Korea recorded an abnormal price surge, highlighting structural risks in after-hours trading.
On June 8, ACE SK hynix Single-Stock Leverage ETF, managed by Korea Investment Management, jumped 49.7% to close at 30,000 won on the Korea Exchange.
The ETF is designed to track twice the daily return of SK Hynix. However, SK Hynix shares fell 7.68% on the day, implying the ETF should have declined by roughly 15%. Instead, the price surged sharply during the closing auction session.
As a result, the ETF’s price-to-net asset value (NAV) deviation widened to as much as 85%, an unusually high level.
Market participants attributed the spike to a large volume of orders executed during the closing auction, with approximately 47,000 shares traded in that period.
Unlike regular trading hours, liquidity providers (LPs)—who typically help maintain alignment between market prices and NAV—are not obligated to submit quotes during the closing auction. This absence of market-making support allowed the deviation to widen significantly.
The incident has raised concerns over potential risks in single-stock leveraged ETFs, particularly during periods when liquidity provision mechanisms are limited.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
