If you manage to read all the way to the end of an otherwise neutral report on the European structured products market issued this week by Europe's trade association, you will come across some rather startling news. And that is, the supply of leveraged products in Switzerland has simply plummeted. Yep, a traditional home for one of the biggest structured products market in Europe is simply evaporating.
An average outstanding volume in excess of €30 billion in the second, third and fourth quarters of 2017, that bubble has popped, with the volume hovering at a relatively measly €6.3 billion in the first quarter of this year, and slipping just that little bit further, to €4.8 billion in the second quarter of 2018.
To put that final number into perspective, the two leading markets for leveraged products, the number for Switzerland is now nearing parity with a market in Germany that has steadfastly remained at around €2 billion per quarter, at least since April last year.
"The outstanding volume of leverage products stood at €6.9 billion at the end of June, a fall of 18.0 percent on the volume reported for the first quarter of 2018 and a drop of 81.0 percent year on year," reported the European Structured Investment Products Association (Eusipa), with no annotation other to inform that there figures are as recorded by the Swiss National Bank, an institution that you would expect to be proudly meticulous.
Over the same period, the amount of investment products increased, although this cannot make up for the reduced size of a market that is synonymous with good and relatively quick profits for supposedly more savvy investors. And there is nowhere else for them to go in Europe, with measly Belgium market recording its regular €2m to €4m in the five quarters since April 2017, while Austria maintained a modest range of €114m to €132m over the same period.
Image credit: aquir
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