Yuanta Securities Korea has launched the first CSI300-linked equity-linked bond (ELB) in South Korea’s retail structured products market.

Yuanta My ELB 26 features a sharkfin payoff structure and will pay 78% participation on the underlying’s performance if its stays between 100% and 120% of its initial level. It also guarantees 102% of capital when the underlying falls below 100% or reaches above 120% of its initial level.

Hyungbin Kim, marketing manager at Yuanta Securities, told SRP that the firm is focused on leveraging its business ties with China and developing Chinese-themed products following the firm’s acquisition by Taiwan’s Yuanta Financial Holdings.

“Currently, the mainstream market is largely dominated by Hang Seng China Enterprises (HSCEI) and iShares China Large-Cap equity-linked securities (ELSs) and ELBs” he said. “We are always keen to introduce new underlyings into the market.”

Kim said that the recent launch of the Shanghai-Hong Kong Stock Connect has resulted in increased demand for structures offering exposure to the Chinese A-share market. The firm, said Kim, has raised KRW380m ($340,859) in just two days and has another CSI300 index-linked ELB open for subscription.

This is the first time the CSI300 benchmark has been used in South Korea’s structured retail market, although it has been featured in exchange-traded funds (ETFs) launched by asset managers such as Korea Investment Management and Mirae Asset Management. KB Asset Management is also offering an ETF linked to the CSI100 index while Samsung Asset Management is offering exposure to China via a FTSE China A50-linked ETF.

SRP data shows that the HSCEI, which was introduced in 2006 in South Korea, continues to be the underlying of choice for structured products.

In 2014, more than 11,900 products have featured the HSCEI index, generating sales worth KRW32tr ($28bn), as a sole index underlying or within a basket of indices or hybrid structure. In addition, since early 2014, the iShares China Large-Cap ETF has gained traction in the private banking segment, having featured in 84 products worth KRW272bn ($244m).

The iShares China Large-Cap ETF was also introduced in the retail market in early March and has recorded KRW1.2tr ($1bn) worth of sales across 300 products year to date.

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