Yonhap News Agency reported on April 27 that South Korea’s financial regulatory authorities recently issued the highest risk warning for crude oil listed index securities (ETN) and listed index funds (ETF), but individual investors still bought 13,000 billion won, and investors suffered heavy losses.
According to the Korea Exchange on the 27th, after the Financial Supervisory Service issued a "dangerous" level consumer alert for some crude oil ETNs, individual investors held long ETNs on oil prices between April 10 and 24. and ETF investment is still as high as 1.35 trillion won.
Previously, due to leverage factors, the gap between the indicator values ??(underlying assets) and market prices of the four projects of Texas-produced crude oil (WTI), futures, and ETN in the United States reached a maximum of 95%. The Financial Supervisory Service announced on On the 9th, the highest level of consumer alert was issued for the above items. This is the first time the Financial Supervisory Service has issued a danger alert since it introduced the consumer alert system in 2012. Afterwards, the exchange issued a rare warning on the above four investment projects on the 22nd, stating that "due to the characteristics of highly speculative leveraged products, there is the possibility of full loss of principal and delisting." On the 23rd, the Financial Supervisory Service expanded the scope of dangerous consumer alerts to all WTI futures, ETN and ETF products.
The Financial Supervisory Service and the exchange recently pointed out that WTI futures prices have turned negative for the first time in history, and the variability of international oil prices has become extreme, causing the divergence rate to significantly expand and causing investors to suffer huge losses. As investors continue to buy, the market price is artificially higher than the indicator value. Therefore, the exchange will formulate the regular response standards related to the divergence rate of ETN and ETF that have been further strengthened recently, and plans to resume trading of the four leveraged WTI futures and ETN items that were suspended due to the expansion of the divergence rate on the same day in a single price transaction. However, due to the excessive deviation rate of these projects, the market price adjustment function is actually paralyzed, and price normalization will be a difficult process. Ultimately, these stocks will have to go through multiple limits and suspensions in the future before their prices return to normal. Therefore, the pain of investors who bought these commodities at inflated prices will continue for some time.
Yonhap News Agency reported on April 27 that due to the spread and persistence of the new coronavirus pneumonia, the exchange rate of the Korean won against the U.S. dollar experienced several sharp rises and falls in March, and the exchange rate variability increased significantly.
According to the Korea Financial Investment Association on April 47, the FX differential trading amount of individual investors in South Korea exceeded US$20 billion in March, reaching a total of US$21.35 billion, a year-on-year increase of 200.1%. Calculated based on the Korean won/US dollar exchange rate at the end of last month, it was approximately 26 trillion won. South Korea's FX differential trading volume was 194,000 pieces, a year-on-year increase of 193.9%.
It is reported that FX spread trading is a high-risk, high-yield financial investment product that involves buying and selling two currencies at the same time to earn the exchange rate difference. Individual investors often suffer losses, so it is "notorious". The leverage ratio of FX spread trading is 10 times. If you entrust US$10,000 to a domestic futures company or intermediary company in Korea, you can use leverage to conduct transactions of US$100,000.
Due to excessive leverage, even if the exchange rate fluctuates slightly, personal investment