📉 Tech Stock Plunge Triggers ELS Concerns: Tesla & Nvidia Face Headwinds! 😱

Big tech stocks like Tesla and Nvidia have taken a nosedive, sparking worries about potential massive losses for investors holding Equity-Linked Securities (ELS) tied to these assets. 😬 Tesla, once near $500, has seen its stock price plummet by over 50%, pushing related ELS products into the dreaded ‘knock-in’ zone. 😬

Tesla ELS in Trouble ⚠️

According to the Korea Securities Depository, nine ELS products, totaling ₩5.9 billion (about $4.5 million USD), have entered the knock-in zone. These were issued when Tesla was around $400 (Dec 10, last year to Jan 24, this year). The knock-in levels for these products range from 75% to 80%, equivalent to a stock price of $310-$330.

Nvidia Joins the Fray 😓

Nvidia-linked ELS are also feeling the heat, with some products issued between January 6 (when Nvidia hit $149) and January 27 (when it plunged to $118) now in the loss zone. Four products, with a total issuance of ₩1.4 billion (about $1.06 million USD), are affected. Nvidia’s stock is down over 36% since January 6.

Double Trouble: Tesla & Nvidia Combo 😵‍💫

Some ELS products based on both Tesla and Nvidia are also nearing the danger zone. For instance, an ELS issued by Mirae Asset Securities on January 23 has a knock-in level of 50%. This means a knock-in event will occur if Tesla falls below $73.61 or Nvidia drops below $206.19.

What’s Next? 🤔

While providing physical shares can mitigate losses, the clock is ticking as these ELS products mature in June and July. If the stock prices don’t recover in the next three months, investors could face losses of up to 40%! 😱

Market Outlook 🔮

Hwang Su-wook, a researcher at Meritz Securities, warns that the U.S. stock market slump could last from a week to two months. He emphasizes that the outcome of trade negotiations between the U.S. and countries like Taiwan and Japan will be crucial for any potential market recovery.

Note: ELS (Equity-Linked Securities) are a type of structured investment product where returns are linked to the performance of an underlying asset, such as a stock or index. ‘Knock-in’ refers to a threshold level. If the underlying asset’s price hits this level, the investor’s principal is at risk.