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Banks Reportedly Curb Hedge Fund Leverage on SK Hynix and Samsung; XL2CSOPHYNIX (07709.HK) Gains Narrow to 6.5%
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According to Bloomberg, citing sources, as share prices of SK Hynix and Samsung Electronics have surged since the start of the year, major global banks are restricting hedge funds’ leveraged bets on the two stocks. Institutions including Citi, JPM and G Sachs have raised financing costs for hedge funds going long SK Hynix and Samsung Electronics via swap transactions. Banks are also tightening the size of new trades and screening counterparties more strictly. The restrictions also apply to Taiwan Semiconductor Manufacturing Company Ltd. (TSM.US). It is reported that M Stanley is rejecting client requests for new swap transactions on the two South Korean stocks. Some second-tier banks have stopped accepting new orders over the past two weeks, while certain large global banks that remain open to new orders are reviewing client requests on a case-by-case basis. In South Korea, SK Hynix trimmed gains to 4.33% at 2.192 million won, while Samsung rose 8.03% to 323,000 won. In Hong Kong, XL2CSOPHYNIX (07709.HK) climbed 6.51%, and XL2CSOPSMSN (07747.HK) surged 14.59%. Swap transactions are a commonly used investment tool among hedge funds, allowing leveraged exposure without holding the underlying assets. Financing quotes for swaps on SK Hynix and Samsung have reportedly been raised to between SOFR plus 300 bps and 11%. With SOFR currently at about 3.6%, this implies new rates could reach nearly 15%. By comparison, financing rates in early May were only about 100 to 200 bps above SOFR. (mn/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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