Hong Kong 26-Year-Old Trader Misappropriates HK$50 Million to Bet Big on Hynix ETF, Suffers HK$150 Million Loss

TechFlow news, July 27, according to Tencent News "YiXian", a 26-year-old male trader at Hong Kong Cheung Fu Management Services Limited unauthorized misappropriated HK$50 million of company funds as margin between January 9 and July 20 this year, aggressively buying the CSOP Hynix 2x Daily Leveraged Product ETF listed on the HKEX (07709.HK) through financing leverage, ultimately resulting in paper losses of up to HK$150 million.

Driven by the memory chip concept, the ETF surged to a historical high of HK$193.65 at the end of June this year, but subsequently the semiconductor sector corrected sharply, plummeting to HK$52.58 by July 20, a drop of over 72%. Hong Kong financial analysts analyzed that the compounding of double leverage from margin financing and the 2x long ETF was the main reason why the HK$50 million principal turned into a huge loss of HK$150 million.

The incident was uncovered during the company's recent audit, and the involved man was arrested by the police on July 20 on suspicion of "theft". Currently, the relevant stock positions have not yet been forcibly liquidated, and the final loss remains uncertain. After the incident, some Cheung Fu Securities customers initiated risk-avoidance withdrawals.