South Korea Warns of High-Risk Oil and Gas ETPs Amid Volatile Markets
The South Korean Financial Supervisory Service (FSS) has warned investors about the high-risk nature of oil and gas exchange-traded products (ETPs). According to the FSS, 9 out of 10 ETPs in this category are leveraged or inverse instruments, which can wipe out a significant portion of an investor's principal if their directional call is wrong.
The FSS reported that South Korea's commodity ETP market capitalization stood at approximately $9.1 billion as of September 11, up 1.9% from the end of last year. Within this segment, oil ETP market capitalization surged 46.7% over the same period, jumping from $1.3 billion to $2.0 billion.
The FSS noted that international commodity markets have been extremely volatile this year, with West Texas Intermediate (WTI) crude futures soaring 97% in January and plunging 39% by July before rebounding to $100 by September 11.