UBS exhausts inventory of Tencent long DLCs following China’s overnight slump

UBS AG, the designated market maker for a locally traded daily leveraged certificate (DLC) of Tencent Holdings, has sold all of its inventory in Tencent 5xLongUB241231 (TSGW), the bank said in a press statement on Tuesday (Oct 25).

TSGW is a European-style cash-settled long certificate with a daily leverage of 5x. DLCs allow investors to make short-term directional bets on a stock, and amplify their returns with leverage. A 1 per cent increase in the value of Hong Kong-listed tech conglomerate Tencent raises the value of TSGW by 5 per cent.

Shares of Tencent fell 11 per cent on Monday (Oct 24), alongside those of many other China-focused tech companies. Hong Kong-listed Alibaba Group Holding also fell 11 per cent, while Nasdaq-listed e-commerce platform JD.com tumbled 13 per cent.