HSCEI ELS investor losses mount, concerns also increase

[Photo by Yonhap]

South Korean investors lost nearly 60 percent of their investments in equity-linked securities (ELS) that track the performance of the Hang Seng China Enterprises Index (HSCEI) as the stock index plunged by 10 percent since the start of 2024. This has led to widespread concern, which in turn led to investor protests as well as regulatory investigations.

In one example, Mirae Asset Securities ELS 29447, an ELS product that matured on January 17th, 2024, lost 56.05 percent in value according to sources familiar with the financial industry on Sunday.

Losses for the HSCEI-tied ELSs sold by the country’s top five lenders in 2024 to date are almost at the 230 billion won ($171 million) mark, with an increase of 122.9 billion won in just one week.

The rapid fall in the index since the very beginning of 2024 has caused a larger loss in the securities. The HSCEI has plunged by 11.12 percent for the year to date to 5127.24 as of Friday from 5768.5 at the end of 2023.

As the losses continue to mount, some investors are expected to accuse financial institutions of failing to explain potential risks from the securities.