--- title: "South Korean ETF Sees \"Reverse Surge\": SK Hynix Plunges 8%, While 2x Long ETF Soars 50%" type: "News" locale: "en" url: "https://longbridge.com/en/news/289049575.md" description: "A 2x leveraged ETF tracking SK Hynix surged 50% against the trend on a day when the underlying stock plummeted nearly 8%. Due to market maker quoting failures and dried-up liquidity during the closing phase, the fund's price deviated significantly from its net asset value. However, once normal quoting resumes on Tuesday, the ETF is expected to rapidly revert to its Fair Value, potentially leaving investors who bought at the peak with losses approaching 50%" datetime: "2026-06-08T11:44:50.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/289049575.md) - [en](https://longbridge.com/en/news/289049575.md) - [zh-HK](https://longbridge.com/zh-HK/news/289049575.md) --- # South Korean ETF Sees "Reverse Surge": SK Hynix Plunges 8%, While 2x Long ETF Soars 50% A 2x leveraged ETF tracking SK Hynix's stock price **surged 50% against the trend, hitting a record high, even as the underlying stock plunged nearly 8% in a single day.** This rare price dislocation has spotlighted the liquidity risks in South Korea's single-stock leveraged ETF market. The KIM ACE SK Hynix Single-Stock Leveraged ETF closed at 30,000 won on Monday, marking its highest price ever. However, given the fund's design to track twice the daily performance of SK Hynix, it should theoretically have recorded a decline of approximately 15% that day. Meanwhile, other single-stock leveraged ETFs tracking SK Hynix declined within expected ranges. Korea Investment Management Co., the manager of the ETF, subsequently attributed the anomaly to a malfunction in the liquidity provider's quoting system. In a text message statement, the fund company said, **"As the market approached the close, liquidity providers were no longer obligated to submit quotes, causing the bid-ask spread to widen significantly. Amid sharp price fluctuations, buy orders placed by investors at market prices were executed, leading to a sharp spike in the ETF price."** The company also stated that it would take this opportunity to comprehensively review the liquidity provider's quoting system and make every effort to prevent similar issues from recurring. ## Liquidity Vacuum Amid Broad Market Plunge This price dislocation occurred during an extremely volatile trading session in the South Korean stock market. On the day, the benchmark Korea Composite Stock Price Index (Kospi) plummeted nearly 9% at one point during intraday trading. The Korea Exchange triggered a 20-minute circuit breaker shortly after the opening, and afternoon trading in the small-cap Kosdaq market was also suspended. The trigger was a massive retreat by investors from AI-related trades, with memory chip giants such as Samsung Electronics and SK Hynix bearing the brunt of the sell-off. Jung In Yun, CEO of Fibonacci Asset Management, stated, "Such price dislocations are rare but not unprecedented. ETFs typically rely on market makers to keep prices aligned with their underlying holdings. However, this protective mechanism can weaken during the closing auction phase, particularly in niche products with limited trading volume." ## Cluster of New Listings and Rebalancing Mechanisms Pose Hidden Risks The KIM ACE SK Hynix ETF is one of more than ten single-stock leveraged ETFs tracking chip stocks that were concentratedly listed in South Korea last month. According to a report previously released by Goldman Sachs' sales team, such products require daily rebalancing to maintain their leverage ratios. This means the fund must buy when prices rise and sell when they fall, a type of trading Goldman Sachs refers to as a volatility "accelerator." Leveraged exchange-traded products offer investors the opportunity to seek excess returns on indices, stocks, bonds, or commodities through derivatives and swap contracts. However, they can also exacerbate price volatility in heavily weighted underlying assets, as issuers often need to quickly buy or sell assets to align the fund with its promised leverage ratio. During recent rounds of intense volatility, the rebalancing cash flows from such products have been considered one of the factors amplifying market swings. ## Buyers at Peak Levels Face Risk of Halved Capital For investors who bought at high levels before the close, the risk is particularly severe. Jung In Yun warned, "The greater concern lies with those investors who bought the ETF near the close. **Once liquidity providers resume quoting at Tuesday's open, the fund is expected to revert to its Fair Value, meaning buyers who transacted around 30,000 won could face losses approaching 50%."** This incident serves as another reminder to the market of the extreme risks inherent in buying niche leveraged products via market orders during the low-liquidity closing auction phase. It also raises higher demands for South Korean regulators and fund companies to improve the product design and market-making mechanisms of single-stock leveraged ETFs. ### Related Stocks - [07709.HK](https://longbridge.com/en/quote/07709.HK.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) - [W4VR.SG](https://longbridge.com/en/quote/W4VR.SG.md) ## Related News & Research - [SK Hynix plans to double capacity to ease memory crunch](https://longbridge.com/en/news/288454795.md) - [SK Hynix Evacuates Thousands Of Workers At Chip Plant After Fire, Toxic Gas Leak](https://longbridge.com/en/news/288263185.md) - [Experts highlight cash flow focus and ETF strategies amid risks](https://longbridge.com/en/news/288661338.md) - [SK Hynix tells investors its US listing plan wins their strong backing, source says](https://longbridge.com/en/news/288678211.md) - [Vanguard Just Launched a New ETF — Why It Matters for Investors](https://longbridge.com/en/news/288741342.md)