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Trade war threatens Korea autocall losses

Dealers warn of $240 million in hedging losses if HSCEI index slides further

Seoul cityscape
Traders are fearing “peak vega” and a reversal of volatility dynamics for autocall products

The South Korean financial regulator has sounded a warning about structured products linked to the Hang Seng China Enterprises Index, which has lost nearly a quarter of its value since January amid US-China trade tensions.

The Financial Supervisory Service plans to monitor the sale of the popular autocallable products as the HSCEI edges closer to territory that dealers say could generate hedging

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