As we recently sent 2017 away, Rohit Jaisingh (pictured), head of equity products advisory - wealth at DBSBank, answers six quick questions about the market for structured products in Singapore in the past twelve months.
Describe the market for structured products in Singapore in 2017 with three words.
Vibrant, growing and reinventing.
What were the most preferred structured products in Singapore in 2017?
In Singapore specifically, investors preferred flow equity structured products and structured products linked to funds.
What underlyings did investors in Singapore used the most in 2017?
In terms of underlyings, investors preferred equities (in particular, the Hong Kong, China and US markets) and funds (in particular, the PIMCO GIS Income Fund). Structured products with Japan and European equities as underlyings witnessed growth through 2017 but overall volumes were still low on a relative basis.
What was the main driver of activity in the market for structured products in Singapore in 2017?
The main drivers of activity in the market for structured products in 2017 were the investors' desire for enhanced yields, the ultra-low interest rates, and the sanguine view on equity markets and fund performance.
What challenges did 2017 bring in the market?
The decline in implied volatilities made it more difficult to extract value for written put option-embedded products, as well as a gearing up for the introduction of MiFID II and PRIIPS.
What is your outlook for the SPs market in Singapore in 2018?
We see continued growth while the underlying market is supportive, a continued focus on flow Equity SPs, and the need to cope with challenges imposed by new regulations.
According to SRP data, in 2017 DBS issued a total of 1,139 structured products worth US$3.5bn in the Asia-Pacific region. As for comparison with previous year, the bank issued 785 structured products worth US$7.4bn in 2016 and 389 structured products worth US$32.5bn in 2015.
In terms of net sales, in 2017 UOB remained the leader on the market for structured products in Singapore with a total of 6 products worth S$298m. Macquarie Group and Commerzbank place second and third with net sales of S$159m and S$66m, respectively.
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