Commerzbank has seen high volumes in tracker and discount certificates linked to the Dax since the election of Donald Trump as President of the US. German investors initially reacted calmly to the news as many had positioned themselves before the elections, according to Anouch Wilhelms (pictured), director, equity markets and commodities, public distribution, Commerzbank.
"Initially, when the news broke a lot of investors repositioned themselves as the trading volume yesterday morning at 8am was exceptionally high with 6,000 transactions with investors using the increased volatility in the morning," said Wilhelms.
"The most traded underlying [...] was the DAX, especially index (tracker) certificates were sought after, but also discount certificates with a 3.8% coupon per annum," said Wilhelms. Aside from the Dax, Daimler, Deutsche Bank, oil, gold, MDAX and the Eurostoxx 50 were the most traded underlyings we sold on the German certificates market, said Wilhelms.
One product which is popular at the moment, according to Wilhelms, is the USA Best Start-Zertifikat on the S&P 500, an index certificate with a lookback feature. With this certificate investors can respond to a possible dip in the S&P 500 which, according to research by Fidelity, tends to perform better under a Democratic president. The index achieved average annualised returns of 10% during a Democratic president's tenure in office from 1928 to December 31, 2015 versus 1.8% for a Republican president, the research said.
"This certificate selects the lowest level (daily closing) of the S&P 500 between October 27, 2016 and January 27, 2017 as the strike level," said Wilhelms.
The bank's issuance year to date amounts to 190,094 products, which makes the bank the most prolific provider of listed products in Germany this year, according to SRP data. The bank issued more than 85,000 leverage turbo certificates 85,000 so far this year while over 54,000 products were (capped) bonus and 29,000 were discount certificates.
Commerzbank has reported the first nine months of 2016 were characterised by a very challenging capital market environment with the high volatility in the global capital markets having a particularly adverse impact on structured products business for institutional clients, according to the bank's interim report which was published on November 4.
As of September 30, 2016, trading liabilities which show the negative fair values of derivative financial instruments that do not qualify for hedge accounting, included €4,962m of certificates and other notes issued, the bank said.
Click the link to view the Commerzbank interim report as at September 30, 2016.
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