CSOP Asset Management has launched two new ETPs in Hong Kong providing leveraged and inverse leveraged exposure to US large-cap companies operating in the oil & gas industries.
The CSOP US Large Oil & Gas Companies Daily (2x) Leveraged Product (7204 HK) and CSOP US Large Oil & Gas Companies Daily (-2x) Inverse Product (7505 HK) have been listed on the Stock Exchange of Hong Kong in Hong Kong dollars.
CSOP notes that oil & gas companies are amongst the most volatile in the economy due to high correlations with oil & gas prices which tend to be influenced by many dynamic factors.
Rising geopolitical tensions related to the war in Ukraine have increased concerns over energy supply shortages, driving oil and gas prices higher this year, while exogenous shocks to global economic growth and even unpredictable weather patterns can cause a significant impact on the demand side.
According to CSOP, this elevated volatility inherent in US oil & gas stocks presents notable trading opportunities.
Ding Chen, CEO of CSOP Asset Management, said: “I believe this pair of inverse and leveraged oil & gas products will be excellent trading tools that can help investors take advantage of US oil & gas sector volatility. We are on a mission to bring more excellent inverse and leveraged products to our investors, further promoting the prosperity and development of Hong Kong’s market.”
Investors should note, however, that inverse and leveraged ETPs are only suitable for sophisticated traders who understand the risks involved. Specifically, these products are not suitable as buy-and-hold investments as they tend to decay in value if held for an extended period of time, potentially leading to significant losses, especially in volatile but range-bound markets.
Investment approach
The ETPs provide twice the daily performance (+200%) or twice the inverse daily performance (-200%) of the Solactive US Large Oil & Gas Companies Index.
The index consists of the 15 largest US-listed companies classified within the following FactSet industries: oilfield services & equipment, integrated oil, oil & gas pipelines, oil & gas production, oil refining & marketing, and contract drilling.
Constituents are equally weighted, and the index is reconstituted and rebalanced semi-annually.
Each ETP comes with a management fee of 1.60% and estimated ongoing charges over a year of 2.00%.