SK Hynix IPO Drives Latest Round of Single-Stock Filings
With SpaceX’s mammoth IPO in the rear-view mirror, ETF providers are taking advantage of an influx of other market debuts.
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Asset managers are treating monster IPOs like retailers treated the World Cup: They’re stocking the shelves, marketing products and building momentum before the main event even begins.
Take South Korean chipmaker SK Hynix’s upcoming listing of American depositary receipts. While they’re expected to start trading on the Nasdaq Friday, issuers including Themes, CorgiFunds, Direxion and ProShares have already announced leveraged funds that will track the US listing. It was just a few years ago that single-stock ETFs hit the US market, giving investors leveraged bets on some of the hottest names on Wall Street, such as NVIDIA, Tesla and Apple. Because these funds are geared toward short-term trading, cost isn’t as much of a differentiator between single-stock ETFs as marketing, brand awareness and time to market. Being able to take advantage of investor hype pays off, and firms are adapting their strategies accordingly.
“We’re seeing renewed investor interest in IPOs and newly listed companies, and at the same time, single-stock ETFs have become one of the fastest-growing segments of the ETF market,” said Simeon Hyman, global investment strategist at ProShares, which is planning a fund focused on SK Hynix.
Who Gets the ETF Treatment?
Not all single-stock ETFs are created equal when it comes to investor excitement. One for a utility or insurance company probably won’t generate the same buzz as a chipmaker like SK Hynix. That’s an important consideration for issuers:
- As SK Hynix becomes available to US investors, ProShares sought to offer investors exposure to a company “playing an important role in artificial intelligence infrastructure,” Hyman said.
- “We expect investors to have strong opinions, both bullish and bearish, on SK Hynix, and we want to provide them with leveraged exposure to the upside and the ability to hedge on the downside,” said Paul Marino, chief revenue officer at Themes ETFs, which recently announced the Leverage Shares 2x Long SK Hynix Daily ETF (SKHX) and the Leverage Shares 1x Short SK Hynix Daily ETF (SKHZ).
A Close Look: Marino added that when considering any leveraged single-stock ETF, the firm looks at investor trends, interest, volume and volatility. “Currently, many of those characteristics are in sectors like AI, robotics, crypto and innovative companies that IPO,” he said.
