Smiling at the Fired-Up Energy: 'Wonyu·Natural Gas ETF·ETN'

May-Related Index Tracking Products Record Up to 50% Price Fluctuations
Top 10 ETN Price Increase Stocks All Crude Oil and Natural Gas Futures Products
ETF Also Accounts for 8 out of 10 Items

"High Price Levels Until August... Volatility in Tracking Products Expected to Continue"

[Asia Economy Reporter Lee Myunghwan] Following the Ukraine war, crude oil and natural gas prices have soared, causing related exchange-traded products (ETPs) to exhibit significant volatility. Products tracking related indices recorded fluctuations of nearly 50%. The securities industry forecasts that energy prices will remain strong for the time being due to supply issues.

On the 8th, Asia Economy analyzed the May price fluctuations of exchange-traded funds (ETFs) and exchange-traded notes (ETNs) listed on the domestic stock market, finding that energy-related stocks such as crude oil and natural gas ranked among the top performers. Among ETNs, all of the top 10 gainers were products tracking crude oil and natural gas futures indices. For ETFs, 8 out of the top 10 were energy-related, except for 2 related to secondary batteries.

Among ETFs, KB Asset Management's 'KBSTAR US S&P Oil Production Companies (Synthetic H)', which invests in US oil and gas exploration and production companies, rose the most at 18.73%. Other energy-related ETFs such as 'KODEX US S&P Energy (Synthetic)' (15.17%), 'SOL China Solar CSI (Synthetic)' (14.32%), and 'KODEX WTI Crude Oil Futures (H)' (14%) also posted gains exceeding 10%. Conversely, inverse products like 'KODEX WTI Crude Oil Futures Inverse (H)' fell more than 10%, down 13.62%.

Similarly, ETNs tracking energy-related indices showed even larger gains. The leveraged product 'TRUE Leverage Natural Gas Futures ETN (H)', which tracks natural gas futures prices at twice the rate, surged 47.52%, ranking among the top gainers. Other energy-related leveraged ETNs such as 'QV Bloomberg 2X WTI Crude Oil Futures ETN' (46.16%) and 'TRUE Bloomberg Leverage WTI Crude Oil Futures ETN' (45.97%) also recorded gains exceeding 40%. Conversely, inverse products tracking related indices suffered losses in the 40% range.

Energy-related products also dominated the top ranks in ETN trading volume and trading value. The 'Samsung Inverse 2X WTI Crude Oil Futures ETN' topped with approximately 990 million trades in May. The highest trading value was recorded by 'Mirae Asset Inverse 2X Crude Oil Futures Mixed ETN (H)', attracting about 251.6 billion KRW. Given the high price volatility of leveraged products, this is interpreted as demand for short-term profit-taking.

The volatility of energy-related products is attributed to the rise in crude oil and natural gas prices following the Ukraine war. On the 7th (local time), the July West Texas Intermediate (WTI) crude oil price on the New York Mercantile Exchange closed at $119.41 per barrel, up 91 cents (0.77%) from the previous session. This closing price was the highest since March 8. Natural gas prices also continued their strength. On the 6th, the July international natural gas price on the New York Mercantile Exchange closed at $9.32 per million BTU, up 9.37% from the previous trading day.

The securities industry expects the sustained rise in energy prices such as crude oil and natural gas to continue for the time being. It is anticipated that volatility in products tracking related indices will persist. Choi Jinyoung, a researcher at Ebest Investment & Securities, advised, "It is possible to maintain a high level of oil prices at least until the end of August," adding, "Although global oil demand will quickly shrink after the seasonal period in the Middle East ends, it is important to remember that supply issues are currently more sensitive."

However, some analyses suggest a trend reversal in oil prices in the second half of the year. Han Seungjae, a researcher at DB Financial Investment, analyzed, "The crude oil market is tight for now but is bound to ease in the second half," and added, "As the tight energy market relaxes in the second half, it is time to prepare for a trend reversal in costs."