(Bloomberg) — Direxion Funds has launched two exchange-traded products that focus on a single emerging-market stock — Taiwan Semiconductor Manufacturing Co. — allowing investors to make outsized bullish bets on it or take positions against the direction of the market.
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The Direxion Daily TSM Bull 2X Shares will enable traders to magnify the moves in TSMC, the artificial-intelligence behemoth and the stock with the biggest weight in the EM benchmark, by 200% on a daily basis. The Bear 1X Shares ETF will seek to achieve inverse of the share’s daily change. Both funds open Thursday, according to Direxion.
“The stock is a major bellwether to both the Taiwan stock market and the broader emerging-market landscape,” said Ed Egilinsky, managing director at Direxion. “With our new ETFs tied to TSM, active traders will have the opportunity to take a short-term magnified bullish view or a non-leveraged bearish position.”
Single-stock ETFs are a recent but growing industry in the US ETF market but have largely been focused on the so-called Magnificent Seven including Apple Inc. and Nvidia Corp. But as the industry expands, emerging markets are becoming a viable hunting ground for short-term traders looking to ride on hot but volatile technology trends.
Both leveraged ETFs and inverse funds seek to achieve their investment goals by using derivative instruments such as swaps and options. Positions are to be held for each day separately and the results are not meant to be accumulated over time, Egilinsky said.
TSMC has rallied 64% this year, its best performance in 25 years, as it is seen as occupying a crucial position in the global AI supply chain. It’s a highly volatile stock, and has an annualized 50-day historical volatility of 49%. Headlines such as earnings, regulatory moves and technology trends often spark big moves in the stock.
The next key event for traders looking to make leveraged or inverse bets on TSMC could be its earnings report, due later this month. The company’s third-quarter sales could come in at the higher end of its guidance range at $23.2 billion, according to Bloomberg Intelligence..
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