SEOUL, July 13 (AJP) -A wave of leveraged exchange-traded funds tied to SK hynix's newly listed American depositary receipts is set to hit Wall Street this week, extending the AI chipmaker's explosive rise from South Korea's stock market to the world's largest financial market and raising fresh concerns that the trading frenzy which reshaped Seoul could spread to New York.
At least six ETF products from U.S. issuers including Leverage Shares, ProShares, GraniteShares and CorgiFunds are scheduled to begin trading on July 13 and 14 U.S. time after SK hynix completed the largest U.S. listing ever by a foreign company.
Most of the funds will offer either two-times leveraged exposure or inverse bets linked to the daily performance of SK hynix's Nasdaq-listed ADRs, allowing investors to magnify gains or profit from declines in one of the world's hottest artificial intelligence stocks.
Leverage Shares plans to launch the 2x Long SK Hynix Daily ETF under ticker SKHX alongside the SKHZ short ETF, while ProShares will debut the leveraged SKHU fund. GraniteShares is preparing the leveraged SKUU and inverse SKDD products, while CorgiFunds and Direxion are also introducing leveraged vehicles.
The launches follow SK hynix's blockbuster Nasdaq debut on Friday, when its ADRs surged 13.08 percent from the offering price to close at $168.49 after the company raised $26.5 billion in the second-largest equity offering in U.S. history behind only SpaceX.
The speed with which ETF issuers have rushed to launch derivative products underscores the extraordinary investor appetite surrounding AI infrastructure stocks, particularly companies at the center of the high-bandwidth memory boom powering generative artificial intelligence.
Single-stock leveraged ETFs have become a lucrative niche for fund managers in recent years, with products tied to Nvidia, Tesla, Alphabet and AMD attracting heavy trading volumes. Similar products tracking SpaceX appeared almost immediately after the aerospace company's U.S. listing, setting records for first-week ETF trading activity.
Unlike conventional ETFs, leveraged funds seek to deliver a multiple of a stock's daily return by using swaps, futures and other derivatives. The products reset every trading day, making them short-term trading instruments rather than long-term investment vehicles.
Their arrival on Wall Street also exports a phenomenon that has already transformed South Korea's equity market.
Leveraged ETFs linked to SK hynix and Samsung Electronics have exploded in popularity since launching in Seoul in late May.
Combined assets in the products have grown to more than 13 trillion won ($8.6 billion), while cumulative trading value has exceeded 212 trillion won in little more than a month. Semiconductor shares and related leveraged ETFs now account for more than 70 percent of total trading on Korea's main bourse, making the AI rally increasingly concentrated in just a handful of securities.
Bank of Korea officials have warned that mandatory daily rebalancing by leveraged funds can amplify price swings as issuers are forced to buy rising stocks and sell falling ones to maintain target leverage. The central bank has cautioned that the products increase concentration risk and can reinforce momentum during periods of market stress.
The Korea Exchange chairman has also publicly expressed regret over approving single-stock leveraged ETFs, arguing that they have contributed to excessive volatility in Samsung Electronics and SK hynix, while some lawmakers have called for the products to be abolished altogether.
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