What happened
A 26-year-old trader at Hong Kong-based Calf Management Services Limited has been arrested after allegedly misappropriating 50 million Hong Kong dollars (approximately $6.4 million) in company funds to speculate on a leveraged ETF tracking SK Hynix.
Why it matters for the market
The trader used the funds as margin to buy the CSOP 2x Leveraged Daily ETF on SK Hynix, amplifying the position through both margin financing and the ETF’s built-in leverage. The bet went wrong when the semiconductor sector slumped.
The ETF hit an all-time high of HK$193.65 in late June but then plunged more than 72% to HK$52.58 by July 20 as chip stocks corrected. As a result, the unauthorized position now shows a paper loss of about HK$150 million ($19.2 million).
What traders should watch
Hong Kong police arrested the trader on suspicion of theft. Since the position remains open, the final loss will fluctuate with the ETF’s price movements.
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