As with many other countries China saw a slowdown in its structured retail products market in 2009, reflecting the global financial crisis and regulatory caution that characterised the second half of 2008 and early part of 2009. A total of 302 products were offered in 2009 with estimated sales of CNY65.29bn (USD9.5bn), a decrease of 62% on 2008.
In terms of the outstanding invested, as at the end of 2009, a total of CNY140.68bn (USD29.4bn) was held by investors, dropping 30% in comparison to the previous year.
Annual Gross Sales and Assets invested in retail structured products in China (USDbn)
The forecast for outstanding assets is based on the amount outstanding at the end of 2009, less the maturing products, plus the forecast for 2010 gross sales.
Hong Kong’s regulatory regime for investments has been under review since the onset of the financial crisis in 2008 and the Lehman default. The Lehman collapse has posed Hong Kong regulators a serious challenge, as many thousands of local retail investors were impacted through the distribution of credit-linked structured products, known as Minibonds, issued by Lehman Brothers. Legal wrangles for compensation, public protests and regulatory consultations saw structured investments sales become increasingly politicised and scrutinised in the media and by politicians.
Annual gross sales and assets invested in retail structured products in Hong Kong (USDbn)
The Hong Kong retail structured products market experienced a 79% decline in gross sales in 2009 to HKD49bn (USD6.3bn) compared to HKD228bn (USD29.3bn) in 2008. In total at the end of 2009 there was HKD179bn (USD23bn) outstanding in all forms of retail structured products, a decline of 46% compared to HKD331bn (USD43.5bn) at the end of 2008. It should be noted that flow products, that is recurring products such as dual currency deposits, ELDs, and ELIs, accounted for 92% of sales in 2009
Whilst the Japanese economy has continued to suffer from low growth in recent years, the local market for retail structured products has nevertheless continued to expand as investors have sought opportunities for better returns in a low interest rate environment. Indeed the Japanese market is the largest in the Asia-Pacific region in terms of both annual sales and outstanding invested.
Gross annual sales reached JPY3.95tr (USD42.82bn) in 2009, a rise of 11% on the previous year. This figure includes so called flow products, which comprise regular issues of mainly dual currency and simple callable structures which are continuously available.
The total outstanding invested at the end of 2009 came to JPY9.92tr (USD107.59bn) representing an increase of 22.8%.
Annual gross sales and assets invested in retail structured products in Japan (USDbn)