SK Hynix's stock price has increased by over 6%, yet a single-stock leveraged exchange-traded fund (ETF) tracking it has seen a nearly 40% drop. This decline is attributed to a normalization process following a price distortion that occurred just before the previous day's market close.
As of 9:35 a.m. on June 9, the 'ACE SK Hynix Single-Stock Leveraged' ETF was trading at 18,335 won, down 38.88% (11,665 won) from the previous trading day. In contrast, the underlying asset, SK Hynix, was trading at 2,035,000 won, up 6.49% (124,000 won).
Despite SK Hynix closing down 7.68% the previous day, the ETF had surged by 49.7% to close at 30,000 won. This was in stark contrast to other leveraged ETFs from different management firms, which fell by 15-16% on the same day.
Industry analysts believe that a lack of bids from liquidity providers (LPs) during the simultaneous auction at market close led to a surge in market orders, causing the price to significantly exceed its net asset value (NAV). Approximately 47,000 shares were executed during the simultaneous auction, resulting in the price spike.
Market observers interpret the previous day's surge as a temporary supply-demand distortion rather than a reflection of the underlying asset's value increase, leading to the sharp decline as prices returned to normal levels. Investors who purchased near the previous day's closing price faced significant valuation losses within just one day.
Korea Investment Trust Management stated, "The price surged due to market orders being executed in a situation where LP bids were absent just before market close. We will review the LP bidding system to prevent similar occurrences in the future."
* This article has been translated by AI.
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