Mirae Asset Global Investments announced a strategic initiative on Tuesday, aiming to attract significant overseas investment through the introduction of its new single-stock leveraged products, specifically tied to market leaders Samsung Electronics and SK hynix.
These two innovative Tiger-branded leveraged products are scheduled for listing on the Korea Exchange on Wednesday. Each product is meticulously designed to deliver twice the daily performance of its underlying assets, Samsung Electronics and SK hynix shares respectively.
Demonstrating robust market demand even before their official launch, these products collectively garnered 1.34 trillion won ($890 million) in assets under management (AUM). This significant figure includes 747 billion won invested in the SK hynix-linked product and 592 billion won for the Samsung Electronics-linked offering.
Nathan Nam-ki Kim, Mirae Asset’s Chief Officer for ETF Portfolio Management, elaborated on the core objective during a Seoul press conference: “The original purpose behind introducing single-stock leveraged products was to help stabilize the won-dollar exchange rate.”
He further emphasized, “Through these products, we have successfully secured foreign capital inflows, which are poised to offer meaningful support to the national exchange rate.”
Earlier this year, Korean regulators granted approval for single-stock leveraged products. This decision was a strategic move by authorities to mitigate capital outflows directed towards US-listed leveraged ETFs, addressing the persistent downward pressure on the won currency.
Mirae Asset underscored the significant foreign participation as a pivotal advantage for its newly launched offerings. Notably, overseas investors contributed 329 billion won, constituting approximately a quarter of the products’ total pre-launch assets.
Kim noted, “Significantly, some global ETF traders are now entering the Korean market for the very first time.”
While acknowledging that its initial asset base and market-making network are currently more modest compared to its competitor, Samsung Asset Management, Mirae Asset emphasized a distinct advantage: its cash-only redemption structure, which is projected to significantly enhance overall trading efficiency.
In contrast to traditional in-kind settlement systems that necessitate the physical transfer of underlying shares, Mirae Asset’s innovative cash-based model facilitates swifter and more adaptable redemption processes. The company anticipates this will play a crucial role in narrowing bid-ask spreads for investors.
Kim further elaborated that the firm views its primary competition as overseas leveraged products, not solely domestic rivals. He specifically cited a Hong Kong-listed leveraged product by CSOP Asset Management linked to SK hynix as an example of this broader competitive landscape.
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