CSOP SK Hynix Fund Kept 2x Leverage, Dropping 26.9% After Rule Change
Updated
Updated · South China Morning Post · Aug 22
CSOP SK Hynix Fund Kept 2x Leverage, Dropping 26.9% After Rule Change
1 articles · Updated · South China Morning Post · Aug 22
Summary
CSOP Asset Management kept its Hong Kong SK Hynix leveraged fund at the maximum 2x exposure every trading day for three weeks after shifting to a flexible 1.1x-to-2x structure on Aug. 3.
The new design was meant to let managers cut exposure during sharp sell-offs, but the fund still fell 26.9% in its first week under the revised structure, with the share price sliding to HK$31.06 from HK$42.52.
Trading activity also weakened as the losses mounted, with weekly turnover dropping 44.6% week on week to HK$40.15 billion.
The performance highlighted the risk that the structural change offered little practical cushion before regulators' new flexible-leverage framework was expected to help investors in volatile markets.