Tech & AI
US-listed leveraged SK hynix ETFs to shut three months after launch, as the chipmaker's Nasdaq ADRs trade about 42% above Seoul shares
Tradr will liquidate its 2x long and short SK hynix funds after drawing about $1.3 million, days before SK hynix reports third-quarter results.
HedgeWeekly Tech & AI Desk ·
Tradr, the leveraged and inverse ETF brand of AXS Investments, will close its two US-listed funds tied to SK hynix about three months after launch, the Seoul Economic Daily reported on October 25. The Tradr 2X Long SK hynix Daily ETF (SKHA) and Tradr 2X Short SK hynix Daily ETF (SKHN) aim to deliver twice the daily gain or twice the daily loss of SK hynix's American depositary receipts on Nasdaq. These receipts, known as ADRs, are certificates that let US investors trade a foreign company's shares. The funds started trading on July 28. Their board approved the liquidation on October 20. The last trading day on Cboe's BZX exchange is November 5, and the funds are expected to be wound up around November 12.
The two funds held a combined net asset value of only about $1.3 million, according to data provider ETF CHECK. On October 23, SKHA closed at $19.26, down 13.75% from its first-day open, and SKHN closed at $17.18, down 37.64%. Tradr blamed heavy competition among similar products and said it had no concerns about SK hynix as an underlying stock. The two funds are among seven single-stock ETFs Tradr has moved to close this month. The others track Coupang, Pony AI, NXP Semiconductors, NuScale Power and Tower Semiconductor. Separately, ProShares filed on October 19 to withdraw two planned 2x ETFs linked to Hyundai Motor and Samsung Electro-Mechanics.
The closures come as SK hynix's ADRs trade at a wide premium to its Seoul shares. The ADRs closed at $137.02 on October 23. Each one represents a tenth of a Korean share, which implies about 1.813 million won per share, roughly 42% above the Seoul close of 1.277 million won. The gap has lasted because the quota for converting Seoul shares into ADRs, set at 2.5% of SK hynix's shares, was used up in July, the Korea Securities Depository confirmed at the time. That blocks the arbitrage trade, buying cheaper shares in Seoul and swapping them into ADRs, that would normally close the gap. The ADRs began trading on July 10 after a $26.5 billion offering, and the premium peaked at 51% on July 14.
Why it matters: US buyers of SK hynix ADRs are paying far more than Korean investors for the same economic stake in a leading supplier of high-bandwidth memory for AI chips. If more conversion capacity opens up, or demand fades, that premium could shrink fast, separately from SK hynix's own business. The closures also show that US fund firms are pulling back from Korea-linked single-stock products after a correction in Korean stocks. SK hynix reports third-quarter results on October 28 and Samsung Electronics on October 29. Those results will be the next test of AI memory demand and of how much investors will keep paying for US access to the stock.