Leveraged betting surge raises concerns, Asian stock markets may see another sharp fall.

Funds flowing into leveraged trading exchange traded funds (ETFs) as well as the high levels of financing loans used to buy stocks have raised market concerns again - some of Asia's largest stock markets may see a repeat of last week's sell-off triggered by the Middle East conflict. Data shows that leveraged ETFs in Asia saw net inflows over the past week and month. Data as of last weekend also indicated that margin financing balances in Taiwan and South Korea were close to their highest levels in decades, while Japan's margin financing balances hit a historical record. The continued strong demand for leveraged bets indicates that there is still a lot of speculative money in the market. Some buyers hope to maximize potential returns if the Middle East conflict ends quickly. Given that Asian markets performed far worse than US stocks last week, these markets may appear particularly vulnerable if the conflict persists and oil prices rise again. Nick Ferres, Chief Investment Officer of Vantage Point Asset Management, said, "If market volatility remains high, leveraged investors and crowded trading positions may still face forced liquidation." It is reported that Ferres manages a global macro fund focused on Asia. He pointed out that since the outbreak of the Middle East conflict, the high levels of leverage have been an important factor prompting him to remain cautious. In the five trading days leading up to Thursday, leveraged ETFs listed in Asia that amplify returns on stocks, fixed income, and commodities attracted $4.5 billion in net inflows. During this period, the Japan-listed NEXT FUNDS Nikkei 225 Leveraged Index ETF attracted the most funds in the region at $1.4 billion. Single stock leveraged funds also attracted significant inflows. ETFs listed in Hong Kong, managed by CSOP Asset Management and tracking SK Hynix and Samsung Electronics, collectively attracted $1.1 billion in funds. Ferres stated that "the urge to buy on dips remains very strong," but he added that this behavior may backfire until there are true signs of easing tensions.