KB Securities Launches ETN Related to Hong Kong Hang Seng Tech Index

Leveraged Investment Facilitated in Both Rising and Falling Markets by Tracking Hang Seng Tech Index Futures

[Asia Economy Reporter Minwoo Lee] KB Securities is launching exchange-traded notes (ETNs) that invest in futures of the Hong Kong Hang Seng Tech Index, known as the "Hong Kong version of Nasdaq."

On the 1st, KB Securities announced that it will newly list 'KB Leverage Hang Seng Tech Futures ETN(H)' and 'KB Inverse 2X Hang Seng Tech Futures ETN' on the 2nd.

The Hang Seng Tech Index is calculated by Hang Seng Indexes Company, widely known for the HSCEI and HSI indices. It was launched on July 27, 2020, positioning itself as the Hong Kong version of Nasdaq. It consists of 30 stocks listed on the Hong Kong Exchange Main Board, belonging to specific sectors such as industrials, consumer goods, and healthcare, with high exposure to businesses like (mobile) internet, fintech (finance + technology), cloud, and e-commerce. Stocks such as Alibaba, Tencent, and Xiaomi are included.

Both products use Hang Seng Tech Index futures as the underlying asset. The 'KB Leverage Hang Seng Tech Futures ETN(H)' tracks twice the daily return of the Hang Seng Tech Index futures. Conversely, the 'KB Inverse 2X Hang Seng Tech Futures ETN' tracks -2 times the return. The products were introduced to meet leveraged investment demand on the direction of futures based on the Hang Seng Tech Index, allowing use in both rising and falling markets.

The ‘KB Leverage Hang Seng Tech Futures ETN(H)’ is a currency-hedged product linked only to the fluctuations of the underlying index, whereas the ‘KB Inverse 2X Hang Seng Tech Futures ETN’ is a currency-exposed product, which may incur additional gains or losses depending on the KRW-HKD exchange rate fluctuations, separate from the index returns.

The total fees are 0.57% per annum for the 'KB Leverage Hang Seng Tech Futures ETN(H)' and 0.64% per annum for the 'KB Inverse 2X Hang Seng Tech Futures ETN.' These are reflected daily on a pro-rata basis in the final indicative value (IV).

Both products have a maturity of 5 years and can be traded until May 22, 2026, after listing. The issuance volume is 1 million shares each. Rollovers are conducted for three business days starting four business days before the futures expiration every month.

Meanwhile, individual investors who are not professional investors must complete prior education from the Korea Financial Investment Association and meet minimum deposit requirements to invest in leveraged ETF/ETN products for the first time. KB Securities requires a minimum deposit of KRW 10 million for new accounts, KRW 5 million for Royal Star, Gold Star, and Premium Star grade general accounts, and KRW 10 million for other general accounts.

These products may incur principal losses depending on investment results. There is credit risk of issuer default regardless of the performance of the underlying index. Detailed product explanations can be found in the investment prospectus on the KB Securities website or through their branches.

Kim Hoyoung, head of the Equity Division at KB Securities, said, "These two newly listed ETNs are the first domestic products that allow leveraged investment in both rising and falling markets of the Hang Seng Tech Index," adding, "Typically, the Korean won tends to strengthen during index uptrends and weaken during downtrends, so these products were designed to utilize this tendency."

This content was produced with the assistance of AI translation services.