Bursa CEO: Leveraged, inverse ETFs to invigorate local bourse

(From left): Kenanga Investment Bank Bhd executive director and head of group equity broking business Lee Kok Khee, Kenanga Investors Bhd director Imran Devindran Abdullah, Yuanta Securities Investment Trust Co Ltd chairman Dr Julian Liu Tsung-Sheng, Kenanga Investors executive director and chief executive officer Ismitz Matthew De Alwis, Kenanga Investment Bank group managing director Datuk Chay Wai Leong, Kenanga Investment Bank chairman Izlan Izhab and Kenanga Investment Bank founder and adviser Tan Sri Paduka Tengku Noor Zakiah Tengku Ismail. (Photo by Kenanga)

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KUALA LUMPUR (Jan 13): Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift said today the introduction of leveraged and inverse (L&I) exchange-traded funds (ETF) will further invigorate the local bourse by offering investors a wider range of innovative products catering to varying risk appetites.

Swift said this today in a joint statement issued to reporters covering the listing of the Kenanga KLCI Daily 2X Leveraged ETF (KLCI2XL) and Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI) on Bursa's Main Market today by Kenanga Investors Bhd, the asset management arm of Kenanga Investment Bank Bhd.

"We will continue to work closely with Kenanga Investors and other industry partners to drive the sustained development and increase competitiveness of the Malaysian ETF market through education and creation of attractive and diverse investment opportunities that meet the evolving needs of retail and institutional investors," Swift said.

Kenanga Investment claims that the KLCI2XL and KLCI1XI are the first L&I ETFs to be benchmarked against the FBM KLCI.

"Both KLCI2XL and KLCI1XI adopt a futures-based replication investment strategy in order to provide daily performance that closely corresponds to their respective tracked indexes.

"Unlike a conventional ETF, the KLCI2XL aims to achieve a return of two times the FBM KLCI 2X daily leveraged (price) index via futures as margin contracts and money market instruments amongst others while KLCI1XI uses short selling, derivatives trading and other leveraged investment techniques to perform inversely to the FBM KLCI daily short (price) index," Kenanga Investment said.

Kenanga Investment group managing director Datuk Chay Wai Leong said in the statement that Kenanga is continuously working to broaden its range of products and solutions to complement the varied goals investors have.

"While ETFs in South East Asia is still in its early stages, it has been garnering strong traction and showing tremendous growth potential," Chay said.

According to KLCI2XL and KLCI1XI's prospectus, the listing involves up to one billion units for each ETF at RM2 apiece.

At Bursa's 12:30pm afternoon break today, KLCI2XL settled at RM1.99 while KLCI1XI stood at RM2.005