CSOP Lists First KOSPI 200 Covered-Call ETF in Hong Kong

CSOP Asset Management, a major Hong Kong exchange-traded fund manager, is expanding its lineup of products tied to South Korean equities. After launching a KOSPI 200 ETF in July, the firm on Aug. 31 listed a KOSPI 200 covered-call ETF in Hong Kong, citing increased volatility in Korean stocks as supportive of an options-premium strategy.

According to the financial investment industry, CSOP on Aug. 31 listed the CSOP KOSPI 200 Covered Call Active on Hong Kong Exchanges and Clearing Ltd. The fund was listed at about HK$7.8 per unit and trades in board lots of 100 units. Its annual management fee is 0.99%.

The ETF uses swaps, KOSPI 200 futures and KOSPI 200 ETFs to gain exposure to the KOSPI 200 index. It also sells call options linked to the KOSPI 200 to earn option premium through a covered-call strategy.

CSOP's back-to-back launches of Korea-focused products are also seen as improving Hong Kong investors' access to the Korean market. Last year, the firm launched the world's first single-stock leveraged ETFs based on Samsung Electronics Co. and SK Hynix Inc. It then listed a KOSPI 200 ETF in Hong Kong in July.

A CSOP official said money from Hong Kong investors could flow directly into South Korea, improving foreign investors' access to the Korean stock market and creating a positive pipeline for market flows.

Rising volatility in South Korean stocks was another factor behind the launch. Covered-call strategies benefit from higher volatility because selling call options generates larger premiums, making it easier to secure income. As volatility in the KOSPI 200 has increased recently, option-premium yields have also risen.

Ji-yoon Yang, Hankyung.com reporter yang@hankyung.com