Mirae Asset Global Investments will roll out two single-stock leveraged exchange-traded funds (ETFs) based on Samsung Electronics and SK Hynix.

Mirae Asset Global Investments held a "TIGER single-stock leveraged listing press briefing" on May 26 and introduced the product structure and investment cautions for "TIGER Samsung Electronics Single-Stock Leverage" and "TIGER SK Hynix Single-Stock Leverage," which are scheduled to list on May 27.

Each product is designed to track twice the daily return of Samsung Electronics and SK Hynix, respectively. The firm described them as products reflecting investor demand for large-cap semiconductor shares, as Samsung Electronics and SK Hynix are seen as key beneficiaries of rising demand for memory semiconductors driven by the spread of artificial intelligence (AI).

Foreign investor participation stood out in the initial creation stage. Mirae Asset Global Investments said the combined initial creation by foreign investors totalled 329 billion won. The SK Hynix leverage ETF is set to list with 747 billion won, and the Samsung Electronics leverage ETF with 592 billion won.

A number of authorised participants (APs) and liquidity providers (LPs) will take part in providing liquidity. Mirae Asset Global Investments plans to improve investor access from the first day of listing based on ample liquidity. Total fees are set at 0.0901 percent a year, lower than those of similar existing semiconductor theme leverage ETFs.

A key difference in the product structure is the cash creation and redemption method. Mirae Asset Global Investments said it aims to reduce bid-ask spreads and tracking error through the method.

It also applied a dual structure that separates management and liquidity provision. In the management stage, it uses both spot and futures to maintain the advantages of spot leverage while improving efficiency, and in the liquidity provision stage it is designed so APs and LPs can hedge mainly with futures.

In general, for spot-based products, APs and LPs may reflect transaction costs in quotes by factoring in the sale of spot holdings they receive when redeeming. In this process, the burden of spot transaction taxes can be reflected in investors' trading prices.

By contrast, TIGER single-stock leverage applies cash creation and redemption, focusing on reducing the burden of spot transaction taxes that arise during AP and LP hedging.

Mirae Asset Global Investments views the semiconductor market as having entered a new growth phase as AI-driven memory demand increases. It said Samsung Electronics and SK Hynix are major beneficiaries of an AI-driven memory supercycle, with expectations for medium- to long-term growth rising.

Still, investors should note that single-stock leveraged products are highly volatile. Because they are structured to concentrate investment in individual stocks, prices can fluctuate sharply depending on company-specific financial conditions or changes in the business environment.

It also tracks twice the daily return, which can lead to a negative compounding effect as share prices rise and fall. Investors should also check that, when held long term, returns can differ from twice the underlying asset's return.

Kim Nam-ki (김남기), head of Mirae Asset Global Investments' ETF management division, said, "The two TIGER single-stock leverage products minimise bid-ask spreads and tracking error by adopting cash creation and redemption, and further strengthen liquidity through foreign investors' early participation."

He added, "As foreign investors participated in this initial creation with 329 billion won, we expect global investors' high interest and participation to continue even after listing."