Oil ETF Crisis Spreads to Hong Kong as Fund Tumbles 45% By Bloomberg

Oil ETF Crisis Spreads to Hong Kong as Fund Tumbles 45%

CommoditiesApr 21, 2020 11:27PM ET

This article has already been saved in your Saved Items

Oil ETF Crisis Spreads to Hong Kong as Fund Tumbles 45%

(Bloomberg) -- The unprecedented drop in U.S. oil futures is rippling through the world’s exchange-traded fund market, with the latest example in Hong Kong.

The Samsung (KS:005930) S&P GSCI Crude Oil ER Futures ETF, which held more than $500 million worth of the derivatives as of April 20, lost nearly half its value in Hong Kong on Wednesday. The 45% slump to HK$1.82 was both the biggest decline and the lowest level since trading began in May 2016.

Click here to read more about volatility in oil ETFs

Samsung Asset Management (Hong Kong) Ltd, which manages the fund, said in a Tuesday exchange filing that the fund will sell its entire holdings of June oil contracts and buy September contracts. It also warned that in a “worst case scenario,” the net asset value of the fund may drop to zero and investors may suffer “a total loss” of their investments.

“There is a big tracking error after the ETF switches from tracking June futures to September futures,” said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. “After the switch, the value of the ETF evaporates by more than half because of the plunge in oil futures.”

In the U.S., the United States Oil Fund (NYSE:USO), the biggest ETF tracking crude prices, took a series of unusual actions after losing a third of its value in two days. It had to suspend the issuance of new shares, an action that could leave it untethered from prices it’s supposed to track.

ETFs are being rattled because of a quirk in the main U.S. oil benchmark, West Texas Intermediate futures, which requires anyone holding contracts after they expire to be able to take delivery of crude in the oil hub of Cushing, Oklahoma.

Storage tanks there could be completely full by May because of unprecedented lockdown measures to slow the spread of the coronavirus, which have decimated fuel demand. With fewer people able to buy crude and store it, liquidity in near-term contracts could dry up and create squeezes like Monday, when U.S. futures fell to as low as minus $40 a barrel. So ETFs are spreading their exposure into further-out contracts.

(Updates with analyst comment in fourth paragraph and background in sixth paragraph.)

U.S. administers 470.3 million doses of COVID-19 vaccines -CDC By Reuters - Dec 05, 2021

(Reuters) - The United States had administered 470,297,846 doses of COVID-19 vaccines in the country as of Sunday morning and distributed 580,417,105 doses, the U.S. Centers for...

Israel stocks lower at close of trade; TA 35 down 0.20% By Investing.com - Dec 05, 2021

Investing.com – Israel stocks were lower after the close on Sunday, as losses in the Biomed, Technology and Communication sectors led shares lower. At the close in Tel Aviv, the...

Deutsche Post CEO favourite to become Telekom chairman - sources By Reuters - Dec 05, 2021

BERLIN (Reuters) - Frank Appel, the chief executive of German logistics company Deutsche Post (OTC:DPSGY), is the favourite to become the next supervisory board chairman of...

Add a Comment

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:

Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

I have read Investing.com's comments guidelines and agree to the terms described.

I Agree

Write your thoughts here

Are you sure you want to delete this chart?

Delete Cancel

Post

Post also to:

Replace the attached chart with a new chart ?

Replace Cancel

1000

Comment Guidelines

Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.

Please wait a minute before you try to comment again.

Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.

<div id="comment">
				<div class="comment js-comment" data-comment-id="{commentID}" id="comment-{commentID}" data-user-id="">
    <div class="mainComment js-content">
       <div class="commentInnerWrapper">
        <a href="{userLink}" class="js-user-link"><img src="{userImage}" width="33" height="33" alt="{usernameAlt}" class="img" onerror="this.src='https://i-invdn-com.investing.com/defaultUserMaleTmp.png';"></a><div class="commentBody">
                					<span class="commentUsername">
                    	<a href="{userLink}" class="js-user-link js-user-name">{username}</a>
					</span>
                                <span class="js-date" comment-date="{dateFormat}" comment-date-formatted="{dateFormatted}" title="{dateTitle}">Just Now</span>
                <div class="commentDropDown js-commentDropDownWrapper " data-user-id="" data-cid="{commentID}">
	<a href="javascript:void(0);" class="threeDotsIconSmall js-thinDropdownArrow"></a>
	<div class="tooltipPopup commentActionsPop noHeader js-commentDropDownOptions displayNone">
		<div class="addRow js-option share">
			<a href="javascript:void(0);" class="js-commentSharePopup" data-cid="{commentID}" data-curl="{commentLink}"><span class="smallShareIcon middle"></span>Share</a>
		</div>

<div class="js-option addRow follow">
            <div class="js-follow-post-button">
                <span class="alertfollowIcon middle"></span>Follow this post            </div>
            <div class="js-unfollow-post-button displayNoneImp">
                <span class="alertUnfollowIcon middle"></span>Unfollow this post            </div>
        </div>

<div class="addRow js-option save">
		<a href="javascript:void(0);" class="js-save-item-btn" data-item-type="comments" data-item-id="{commentID}">
			<i class="saveItemBigIcon middle"></i>
			Save		</a>
	</div>
	<div class="addRow saveItemsConfirmation noHover displayNone js-saveItemResult">
		
<div class="content js-saveItemSuccess displayNone">
	<span class="mediumGreenSuccessIcon"></span><span>Saved. See <a href="/members-admin/saved-items" target="_blank">Saved Items</a>.</span>
	<a href="javascript:void(0);" class="bugCloseIcon js-close"></a>
</div>
<div class="content js-saveItemAlreadySaved saveItemAlreadySaved displayNoneImp">
	<span>This comment has already been saved in your <a href="/members-admin/saved-items" target="_blank">Saved Items</a></span>
	<a href="javascript:void(0);" class="bugCloseIcon js-close"></a>
</div>
	</div>

<div class="addRow shareButtons js-sharePopup displayNone">
			<div class="js-shareComment"><span class="js-shareCommentSpan"></span></div>
		</div>
	</div>
</div>
                 <div class="commentAuthor js-comment-by-author"><span class="commentAuthorIcon"></span>Author's response</div>             </div>
		<div id="commentText-{commentID}" class="js-text-wrapper commentText withImage">
							<div id="commentBigChart{commentID}" class="commentBigChart js-comment-chart" onclick="openViewChartPopup('{commentID}')">
					<img src="https://d1-invdn-com.investing.com/comments_images/{commentImage}" alt="{commentAlt}">
					<i class="newMagnifyChartIcon"></i>
				</div>
						<span class="js-text">{commentContent}</span>
			<div class="clear"></div>
							<div class="commentButtons js-not-master-user">
					<a href="javascript:void(0)" class="reply js-reply-btn" data-real-parent-id="{commentID}" data-to-user-name="{username}" data-to-user-id="">Reply</a>
					<div class="inlineblock likeDislikeBox js-like-dislike-box" data-item-id="{commentID}">
	<input class="js-like-checkbox" type="checkbox" name="option" value="Yes" id="like_{commentID}">
	<label for="like_{commentID}" class="like" title="I agree"></label>
	<span class="numOfLikes js-like-count lighterGrayFont">0</span>
	<input class="js-dislike-checkbox" type="checkbox" name="option" value="No" id="dislike_{commentID}">
	<label for="dislike_{commentID}" class="dislike" title="I disagree"></label>
	<span class="numOfDislikes js-dislike-count lighterGrayFont">0</span>
</div>

<div class="reportComment js-flag float_lang_base_2">
						<a href="javascript:void(0);" id="commentFlag_{commentID}">
							<span class="reportCommentIcon middle"></span><span class="inlineblock middle">Report</span>
						</a>
					</div>
				</div>
					</div>
	   </div>
	</div>
	</div>			</div>
			<div id="reply">
				
    <div class="commentReply js-comment js-comment-reply" data-comment-id="{commentID}" id="comment-{commentID}" data-user-id="">
		<div class="commentInnerWrapper"><a href="{userLink}" class="js-user-link"><img src="{userImage}" width="33" height="33" alt="{usernameAlt}" class="img" onerror="this.src='https://i-invdn-com.investing.com/defaultUserMaleTmp.png';"></a><div class="commentBody js-content">
            				<span class="commentUsername">
					<a href="{userLink}" class="commentUsername js-user-link js-user-name" onMouseOver="">{username}</a>
				</span>
                        <span class="js-date" comment-date="{dateFormat}" comment-date-formatted="{dateFormatted}" title="{dateTitle}">Just Now</span>
			 <div class="commentAuthor js-comment-by-author"><span class="commentAuthorIcon"></span>Author's response</div> 			<div class="commentDropDown js-commentDropDownWrapper " data-user-id="" data-cid="{commentID}">
	<a href="javascript:void(0);" class="threeDotsIconSmall js-thinDropdownArrow"></a>
	<div class="tooltipPopup commentActionsPop noHeader js-commentDropDownOptions displayNone">
		<div class="addRow js-option share">
			<a href="javascript:void(0);" class="js-commentSharePopup" data-cid="{commentID}" data-curl="{commentLink}"><span class="smallShareIcon middle"></span>Share</a>
		</div>

</div>
		<div id="commentText-{commentID}" class="js-text-wrapper commentText withImage">
							<div id="commentBigChart{commentID}" class="replyBigChart displayNone js-comment-chart">
					<img src="https://d1-invdn-com.investing.com/comments_images/{commentImage}" alt="{commentAlt}">
					<i class="newMagnifyChartIcon"></i>
				</div>
				<span id="commentSmallChart{commentID}" class="commentSmallChart pointer js-comment-chart" onclick="openViewChartPopup('{commentID}')">
                    <img src="https://d1-invdn-com.investing.com/comments_images/{commentImageSmall}" width="116" height="52" alt="{commentAlt}">
                    <span class="chartMagnifyOverlay displayNone"></span>
                    <span class="searchGlassIcon chartMagnify displayNone"></span>
                </span>
						<span class="js-text">{commentContent}</span>
			<div class="clear"></div>
							<div class="commentButtons js-not-master-user">
					<a href="javascript:void(0)" class="reply js-reply-btn" data-real-parent-id="{commentID}" data-to-user-name="{username}" data-to-user-id="">Reply</a>
					<div class="inlineblock likeDislikeBox js-like-dislike-box" data-item-id="{commentID}">
	<input class="js-like-checkbox" type="checkbox" name="option" value="Yes" id="like_{commentID}">
	<label for="like_{commentID}" class="like" title="I agree"></label>
	<span class="numOfLikes js-like-count lighterGrayFont">0</span>
	<input class="js-dislike-checkbox" type="checkbox" name="option" value="No" id="dislike_{commentID}">
	<label for="dislike_{commentID}" class="dislike" title="I disagree"></label>
	<span class="numOfDislikes js-dislike-count lighterGrayFont">0</span>
</div>

Are you sure you want to delete this chart?

Delete Cancel

Post

Replace the attached chart with a new chart ?

Replace Cancel

1000

Comment Guidelines

Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.

Please wait a minute before you try to comment again.

I feel that this comment is:

Spam

Offensive

Thank You!

Your report has been sent to our moderators for review

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

US 30	34,561.5	-78.3	-0.23%
US 500	4,533.6	-43.5	-0.95%
Dow Jones	34,580.08	-59.71	-0.17%
S&P 500	4,538.43	-38.67	-0.84%
Nasdaq	15,085.5	-295.8	-1.92%
S&P 500 VIX	30.75	+2.80	+10.02%
Dollar Index	96.172	+0.014	+0.01%

Crude Oil WTI	66.27	-0.23	-0.35%
Brent Oil	69.91	+0.24	+0.34%
Natural Gas	4.095	+0.039	+0.96%
Gold	1,784.15	+21.45	+1.22%
Silver	22.562	+0.246	+1.10%
Copper	4.2725	-0.0265	-0.62%
US Soybeans	1,269.38	+25.38	+2.04%

SPDR S&P 500	453.42	-3.98	-0.87%
iShares Russell 2000	214.71	-4.50	-2.05%
Invesco QQQ Trust	383.13	-6.78	-1.74%
Direxion Daily Junior Gold Miners Bull 2X Shares	58.46	-0.03	-0.05%
iShares Silver	20.85	+0.16	+0.77%
ProShares Ultra VIX Short-Term Futures	23.50	+2.70	+12.98%
ProShares UltraPro QQQ	150.08	-7.94	-5.02%

Apple	161.84	-1.92	-1.17%
Alphabet A	2,840.0	-19.3	-0.67%
Tesla	1,014.97	-69.63	-6.42%
Amazon.com	3,389.79	-47.57	-1.38%
Netflix	602.13	-14.34	-2.33%
Meta Platforms	306.84	-3.55	-1.14%
Bank of America	43.87	-1.02	-2.27%

Oil ETF Crisis Spreads to Hong Kong as Fund Tumbles 45%

Related Articles