Hong Kong Trader Arrested for Misappropriating HK$50M via Leveraged Hynix ETF, Faces HK$150M Loss on July 20

According to Tencent News, on July 20, a 26-year-old trader at Hong Kong Citic Wealth Management Services was arrested on suspicion of theft after unauthorized misappropriation of HK$50 million as margin. Between January 9 and July 20, the trader used leveraged financing to accumulate positions in the Invesco Hynix 2x Leverage ETF (07709.HK) listed on the Hong Kong Stock Exchange, resulting in an unrealized loss of HK$150 million.

The leveraged ETF surged to a record high of HK$193.65 in late June driven by semiconductor sector strength, but subsequently collapsed to HK$52.58 by July 20, a decline exceeding 72%. The combination of margin financing and the 2x leverage embedded in the ETF structure amplified losses from the HK$50 million principal. The misappropriation was discovered during a routine audit.