Nominal 
The Economic Intelligence News Agency reporter Wang Ze-yan reported on the 4th: The Hong Kong Securities and Futures Commission's newly introduced 'Flexible Leverage Structure' regulation came into effect yesterday. The much-watched 'South Two Times Long SK Hynix ETF (07709)' and 'South Two Times Long Samsung ETF (07747)' announced their target leverage ratios for the first time after yesterday's closing, both maintaining the maximum 2x leverage. Cheung Kin-lung, Deputy Vice President of Sales and Product Strategy at South East Asset Management, stated during today's 'ETF Strategy' program that the company's individual stock leveraged products have sufficient liquidity and have never encountered extreme situations requiring leverage adjustments, so investors need not overly worry about the impact of leverage fluctuations on returns; and even if leverage adjustments occur under extreme circumstances, the impact on investors holding for a single day remains relatively limited.
Cheung pointed out during the program that although the new rules allow issuers to flexibly reduce leverage ratios under extreme market conditions (down to a minimum of 1.1x), South East Asset Management will strive to maintain the maximum 2x leverage. He revealed that since launching its 12 individual stock leveraged products, the company has generally had sufficient capability and liquidity to achieve 2x leverage at the net asset value (NAV) level.
He added that the daily target leverage ratio set before market opening will be disclosed on the product's official website and will remain unchanged throughout the entire trading day; it will never be arbitrarily changed during trading hours, so investors should pay attention to the relevant data before trading.
Some investors worry that daily changes in leverage ratios may affect expected returns. Cheung emphasized that such leveraged products are essentially suitable only for single-day trading, and under the premise of single-day holding, even if the leverage ratio is reduced from 2x to 1.5x, the relative impact is not significant.
Moreover, he particularly emphasized that when investors trade such products in the secondary market, their counterparty is the market maker providing liquidity, not the issuer South East Asset Management. Investors should check the product's real-time NAV (Net Asset Value) on the official website and compare it with the actual secondary market trading price to see if any gap exists.
*Did you know: What is NAV?*
NAV refers to the fund's total assets minus total liabilities, divided by the total number of ETF units outstanding, representing the 'true intrinsic value' of each ETF unit. It also serves as the benchmark for issuers to use derivative instruments (such as swap contracts) to achieve leveraged tracking.
However, the price investors see on quote machines is the 'market transaction price,' which results from real-time matching between investors and market makers in the secondary market. The market price may be affected by multiple factors such as market supply and demand liquidity, cross-market trading time differences, and hedging costs, leading to premium or discount gaps relative to the product's NAV.
Cheung pointed out during the program that although the new rules allow issuers to flexibly reduce leverage ratios under extreme market conditions (down to a minimum of 1.1x), South East Asset Management will strive to maintain the maximum 2x leverage. He revealed that since launching its 12 individual stock leveraged products, the company has generally had sufficient capability and liquidity to achieve 2x leverage at the net asset value (NAV) level.
He added that the daily target leverage ratio set before market opening will be disclosed on the product's official website and will remain unchanged throughout the entire trading day; it will never be arbitrarily changed during trading hours, so investors should pay attention to the relevant data before trading.
Some investors worry that daily changes in leverage ratios may affect expected returns. Cheung emphasized that such leveraged products are essentially suitable only for single-day trading, and under the premise of single-day holding, even if the leverage ratio is reduced from 2x to 1.5x, the relative impact is not significant.
Moreover, he particularly emphasized that when investors trade such products in the secondary market, their counterparty is the market maker providing liquidity, not the issuer South East Asset Management. Investors should check the product's real-time NAV (Net Asset Value) on the official website and compare it with the actual secondary market trading price to see if any gap exists.
*Did you know: What is NAV?*
NAV refers to the fund's total assets minus total liabilities, divided by the total number of ETF units outstanding, representing the 'true intrinsic value' of each ETF unit. It also serves as the benchmark for issuers to use derivative instruments (such as swap contracts) to achieve leveraged tracking.
However, the price investors see on quote machines is the 'market transaction price,' which results from real-time matching between investors and market makers in the secondary market. The market price may be affected by multiple factors such as market supply and demand liquidity, cross-market trading time differences, and hedging costs, leading to premium or discount gaps relative to the product's NAV.
