Foreign media: The impact of such products on the United States stock trading structure is increasing with the continued flow of funds to leverage and reverse leverage stocks. According to Simon White, a macro strategist in Bloomberg, the rebalancing trade that occurs before closing up has become one of the unforgettable sources of tailing fluctuations.
It's approaching $200 billion.
According to the article, the United States leverage and reverse leverage stock ETF total assets are close to $200 billion and are at an all-time high. Part of the trading day, the trade demand brought about by the rebalancing alone was more than $50 billion, also on record.
Funding is concentrated in the direction of science and technology growth, including semiconductors, technology units and highly leveraged products associated with the Tesla and American Light Technology units. This reflects an increasing demand from investors for leverage for technology and AI.
Up and down.
Unlike regular ETFs, such products, in addition to foreclosure and indexing, are subject to a daily shift back to target leverage. As a result, whether the market rises or falls, the fund manager is required to make mechanical adjustments.
According to the article, the leverage ETF is naturally characterized by "doing empty Gamma". Simply put, when markets rise, the Fund often needs to continue to buy in in order to restore established leverage; when markets fall, it needs to sell assets to lower risk exposures.
Rebalancing before closing.
This way of dealing would continue to add to the original pattern rather than provide liquidity in the opposite direction. As a result, the increase could be further pushed up and the decline could continue to be magnified, making market volatility more likely to spread.
White believes that this may explain the recent increase in the incidence of the US share Gamma falling into negative areas. In this judgement, the leverage ETF is not just a passive follow-the-market tool, but it also affects price performance.
According to the article, these rebalancing transactions are usually carried out in the last few minutes before closing, and the effect on tailings liquidity is particularly evident. If the market was not deep enough at that time, it would have been easier to increase price swings by concentrating.
White also mentioned that even if the overall trade growth factor was eliminated and a standardized comparison of mini-standard 500-index futures was made, the leverage ETF rebalancing the share of financial flows in the volume of transactions was historically high.
This means that the problem is not only that of a larger product, but also that the penetration of such funds into market structures is faster than the expansion of overall liquidity. For the US share, leverage ETF has gradually become an important factor influencing tailing pricing and short-line fluctuations.