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CSOP’s SK Hynix leveraged fund takes a 77.2% hit after rules change
After switching to a flexible leverage ratio in early August, the fund still kept its maximum double exposure daily, helping drive a 26.9% drop in the first week to HK$31.06 from HK$42.52.
A South Korean retail investor, Carol Kim, said she expected a revised leverage structure to reduce losses in a Hong Kong-based CSOP Asset Management leveraged product tied to SK Hynix, but the fund posted a 77.2% hit.
According to SCMP Economy, CSOP changed the structure on August 3, replacing a fixed leverage model with a flexible ratio set to range from 1.1 times to two times, which was intended to give managers the ability to cut exposure during sharp sell-offs.
However, the outlet reported that CSOP’s daily disclosures showed the fund maintained its maximum double-exposure limit every trading day for three weeks after the change, leaving the expected buffer largely unused.
SCMP Economy added that in the first week under the new approach, the CSOP Hynix product fell 26.9% as SK Hynix shares dropped from HK$42.52 (US$5.42) to HK$31.06, while weekly turnover declined 44.6% week on week to HK$40.15 billion (US$5.12 billion).