Two funds linked to the AI boom are being shut down in the U.S. They had been in operation for several months.
Funds investing in SK Hynix shares are being liquidated in the U.S. due to waning interest in AI / Photo: Poetra.RH / Shutterstock
Two leveraged exchange-traded funds linked to South Korean memory chip maker SK Hynix will be liquidated just a few months after their U.S. debut — as investor interest in artificial intelligence has cooled, according to Bloomberg.
These are funds from Tradr ETFs. One of them allows investors to bet on the rise of SK Hynix’s American Depositary Receipts (ADRs) in New York and is designed to deliver double the daily return of the ADRs. The second fund delivers double the return when prices fall.
Both funds debuted on July 28, following SK Hynix’s highly anticipated initial public offering in early July—the largest-ever U.S. listing of a foreign company. Since then, the Tradr 2X Long SK Hynix Daily ETF, which takes long positions, has lost more than 5%, while the Tradr 2X Short SK Hynix Daily ETF, which takes short positions, has plummeted 42%. Their assets have fallen by more than 60% from their peak levels and now total about $1.3 million, the agency notes.
SK Hynix's depositary receipts rose 5% over the same period, outperforming shares on the domestic market. In South Korea, the company’s market value has fallen 17% since late July and 56% from its all-time high reached in June. During trading on October 26, SK Hynix shares fell 0.2%, while in U.S. pre-market trading, the stock jumped more than 2%.
Bloomberg notes that other ETF providers, including ProShares, Leverage Shares, and Direxion, have also launched similar products linked to the South Korean chipmaker. The funds from Tradr ETFs are expected to close on November 12, the provider said in an official statement.
What's Happening in the Memory Market
Shares of SK Hynix and its competitor Samsung Electronics have experienced sharp fluctuations this year amid frenzied demand and sell-offs in the artificial intelligence sector, Bloomberg explains. The euphoria surrounding the artificial intelligence boom has given way to concerns about expensive borrowing to finance large-scale infrastructure spending, the agency reports.
At the same time, despite lingering doubts about the sustainability of the rapid growth in demand, Samsung, SK Hynix, and other memory manufacturers—such as Micron Technology and Kioxia—are expanding their production capacity. They cite long-term contracts with major technology companies, including Meta Platforms and Amazon.
This article was AI-translated and verified by a human editor
