The retail structured products market in Singapore saw a 33% drop in sales in 2009 to SGD4.53bn (USD 3.22bn), as the regulatory fallout from the Lehman default in 2008 continued to hold the market back. Confidence in structured products from both a regulatory and investor perspective was badly hit as a result of the large volumes of credit-linked products, many being Lehman-issued so-called Minibonds, that had been sold in the local retail market. The resulting distress amongst retail clients, as in Hong Kong, has had a disproportionate effect on confidence. Claims for compensation and increased regulatory scrutiny were all part of the structured investment landscape in 2009 with several local firms being given temporary bans from the distribution of structured products this year.

Annual gross sales and assets invested in retail structured products in Singapore (USDbn)

As might be expected from a relatively small country, retail sales are small compared to other countries in the region and issuance is also lower with only 111 products launched in 2009, all in the form of deposits. As at the end of 2009 there was SGD18.79bn (USD13.37bn) outstanding in all forms of retail structured products. There is of course a relatively large private banking market in Singapore, which is not accounted for in the above figures.

South Korea

The Korean market slowed slightly in 2009 with gross sales falling by just 1.9% in to KRW10.3tr (USD8.9bn) compared with KRW10.5tr (USD9.0bn) in 2008. The amount outstanding at the end of 2009 was KRW16.7tr (USD14.4bn), a fall of 9.7% compared to the end of 2008.

Annual gross sales and assets invested in retail structured products in South Korea (USDbn)

Capital-at-risk products continue to dominate in Korea with products that guaranteed full principal accounting for only 22.9% of issuance in 2009. Popular payouts were typically knockouts, with descending trigger barriers known as ‘step downs’.