A 26-year-old trader in Hong Kong misappropriated HK$50 million to gamble on the Haili (Haier?) ETF, suffering a huge loss of HK$150 million.

Deep Tide TechFlow report: On July 27, according to Tencent News’ “Front Line,” a 26-year-old male trader at Hong Kong Fortune Wealth Management Services Co., Ltd. misappropriated HK$50 million of the company’s funds as margin without authorization between January 9 and July 20 this year, using financing leverage to make large purchases of the Southern Dongying 2x Long Haili ETF (07709.HK) listed on the Hong Kong Exchanges and Clearing, ultimately resulting in book losses as high as HK$150 million.

Driven by the storage-chip theme, the ETF surged to a historical high of HK$193.65 by the end of June this year, but then the semiconductor sector saw a sharp pullback. As of July 20, it had fallen to HK$52.58, a drop of more than 72%. Hong Kong financial professionals analyzed that the combined effect of dual leverage—margin financing and the 2x long ETF—was the main reason why HK$50 million in principal turned into a massive loss of HK$150 million.

The incident was uncovered during the company’s recent audit and account checks. The suspect was arrested by the police on July 20 on suspicion of “theft.” At present, the relevant stock positions have not yet been forcibly liquidated, and the final loss remains uncertain. After the incident, some clients of Fortune Wealth Securities made precautionary withdrawals.