Hong Kong to list world’s first Samsung single-stock leverage ETF

A pair of leveraged exchange-traded funds tracking only Samsung Electronics Co. will make a debut on the stock exchange in Hong Kong next week, which will be the world’s first ETF holding a single Korean stock as its underlying asset.

According to investment banking industry sources, CSOP Asset Management Ltd. will list CSOP Samsung Electronics Daily (2x) Leveraged and CSOP Samsung Electronics Daily (-2x) Inverse ETFs on the stock market in Hong Kong next Monday.   

CSOP is the second-largest ETF issuer by assets under management (AUM) in the city, a special administrative region of China.

This launch marks the first ETF product globally to offer exposure to a single Korean stock, offering a novel approach to trading Samsung Electronics shares.

The product will allow investors to trade Samsung Electronics shares in new ways, moving beyond traditional investment vehicles and an ETF tracking a group of multiple companies as underlying assets.

As leveraged instruments, CSOP’s new ETFs are designed to magnify daily returns, allowing investors to gain or lose twice the return of Samsung Electronics’ daily stock performance.  

For example, when Samsung Electronics shares rise by 1%, the 2x leveraged ETF records a 2% gain, while the inverse product logs a 2% loss. The reverse applies when the stock declines.  

Investors bullish on Samsung Electronics may prefer the 2x product for amplified gains, while those expecting a drop in the share price can take bearish positions through the inverse ETF.  

Currently, short selling and futures contracts are the primary methods for profiting from stock declines in Korea, but both come with high entry barriers for retail investors due to the country’s strict regulations.   

The current Korean capital market law bans issuing single-stock leveraged and inverse ETFs, driving away local investors to seek more flexible options in overseas markets, like Hong Kong, said an official in charge of ETF products at a Korean asset management firm.

Samsung Electronics shares ended up 0.9% at 57,400 won ($40.37) on Wednesday. 

Write to Su-Ji Na at suji@hankyung.com
Sookyung Seo edited this article.