(Bloomberg) -- About 2.7 trillion won ($1.9 billion) worth of equity-linked securities sold mostly to retail investors in South Korea are estimated to be at risk of capital losses due to the Hang Seng China Enterprises Index’s drop below 5,000, according to Samsung Securities Co. analyst Jun Gyun.

The Hong Kong gauge briefly fell below 5,000 Monday morning before bouncing back above that level. Once the derivatives products break through key barriers like those called “knock-in” levels, investors in the products face the risk of losing much of their principal. That may also increase volatility in Hang Seng futures markets as traders who hedged their holdings with futures are forced to liquidate their positions, Jun said by phone.

The key Hong Kong stock gauge’s drop below 6,000 in early October has already put at risk of capital losses around 5 trillion won of other so-called autocallables that are tied to the index, according to the Samsung analyst. A further decline in the gauge may lead to more volatility in Hong Kong futures markets. 

Read: HKEX to Resume Volatility Control for HSI Futures Monday

Along with S&P 500 Index, Euro Stoxx 50 and Kospi 200, the Hang Seng gauge is the most popular underlying asset for these complicated structured products that attracted many retail investors with juicy returns at a time of low interest rates.

There’s some $15 billion worth of autocallables in total tied to the index that have yet to mature and could be at a loss after the gauge plunged last week following the end of China’s Party Congress. The drop came amid concerns over a lack of supportive policies for the beaten-down property sector and the recommitment to the Covid-Zero policy. 

(Adds chart. A previous version of the story corrected the name of the index.)

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