"ETN Cold Wave Melted" Indicator Value Surpasses 9.1 Trillion Won, Record High Since Listing... 40% Surge in Stocks

[Asia Economy Reporter Lee Seon-ae] The ETN (Exchange Traded Note) market, which tracks the returns of underlying indices, is heating up again. As of January, the total indicative value has perfectly surpassed 9 trillion won, marking an all-time high since the market's inception. This surge is attributed to the easing of new listing regulations and the emergence of various new products driven by rising commodity prices, which have attracted strong investment demand.

According to the Korea Exchange on the 24th, the total indicative value of the ETN market increased from 7.6 trillion won at the end of 2020 to 8.8 trillion won at the end of 2021, reaching approximately 9.1 trillion won as of January. This is the first time the total indicative value has exceeded 9 trillion won since the ETN market opened in 2014. Although it briefly touched 9 trillion won in October last year, this is the first time it has fully surpassed that threshold, soaring to 9.1 trillion won. The explosive investment demand for leverage and inverse ETNs during the 2020 global financial market collapse crisis demonstrated the practical value of ETNs.

The number of listed ETN products has also increased significantly. From 190 at the end of 2020, it rose to 270 by the end of 2021, a 42.1% increase. This means 80 new products were listed within a year. The number of ETN issuers also grew from 8 financial investment firms at the end of 2020 to 9 by the end of 2021, with Meritz Securities joining.

The ETN market faced a severe cold spell in 2020 due to unprecedented events such as negative oil prices, which caused significant losses in oil ETNs. This highlighted the risks of ETN investments, dampening investor sentiment and leading to strengthened regulatory oversight of high-risk ETN products by financial authorities. Among these, the temporary ban on some new ETN listings also had a major impact. However, amid the COVID-19 pandemic, global supply bottlenecks and demand expansion from reopening economies caused commodity prices?including energy, metals, and agricultural products?to rise. This sparked explosive investor interest in leverage ETNs, leading to a surge in trading volume. Recognizing the growth potential of the ETN market, issuers began launching various new products. Financial authorities also revitalized the market by permitting the launch of "representative index tracking" products as part of efforts to activate the ETN market.

To ensure product diversity, financial authorities proposed allowing market representative index ETNs, launching overseas-type ETNs to absorb demand for direct overseas stock purchases, and easing voluntary delisting requirements to remove restrictions on product entry and exit. Jeon Gyun, a researcher at Samsung Securities, stated, "As a result, in 2021, many products were launched that could meet investor demand for domestic and international leverage and inverse products, such as KOSPI 200, KOSDAQ 150, Standard & Poor's (S&P) 500, and Nasdaq." He added, "Since ETN liquidity and sales scale show a positive correlation with the volatility level of underlying assets, ETNs should be considered as one of the actively usable products during volatile market phases."

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