Mirae Asset Securities rose above Korea Investment & Securities as the most active of the 22 issuers of retail products in South Korea in October, according to SRP data. Samsung Securities remained the third most active retail provider although it was the leading manufacturer of private banking products over the month. NH Investment & Securities attracted the highest sales volume for the month, of KRW964bn (US$0.82bn) from just 218 products.
Kookmin Bank was the leading third party provider, increasing its sales by 70%, while Woori Bank sold a mere 14 products, worth KRW90bn. The government's attempts to sell Woori have come down to two disclosed final bidders: Hanwha Life, the country's second-largest life insurer by assets, and Kiwoom Securities and Tongyang Life Insurance, which is owned by China's Anbang Insurance Group, according to the Financial Services Commission (FSC).
In October, 62 products were sold as retirement pension products, half of which were digital and linked to Samsung Electronics' shares, but since the company announced an indefinite halt to production of the Note 7, the issuance of SEC-linked products has rapidly decreased.
The overall structured products market continued its steady rise, with retail and private banking issuance up 7% and 5%, respectively, although volumes down 9% and 7% on the month. In October, 133 products were withdrawn early, 81% of which were retail, while three credit default products gathered the highest sales volume over the month, with Hana Daetoo's DLB 565 gathering US$85.2m. A total of 2,491 retail and private banking products worth KRW6.29 trillion (($5.46bn) matured in October.
The investor preference for growth products continued, but there was an increase in the issuance of income products, with the five issued in October linked to either the 91-day certificate of deposit rate, CMS or CMS and Libor, while featuring a combination of accrual, range and callable payoffs, and attracting sales of US$122m.
The combination of knockout/protected tracker/worst-of options remained the most popular payoff, and featured in 651 products worth KRW2,037bn; there were 121 digital/knockout/protected tracker/worst-of options, 101 digitals (101), and 63 knockout/protected trackers. Kiwoom Securities continued offering products from its new series linked to Tesla Motors and Apple, and featuring a combination of enhanced tracker/knockout/protected tracker.
The Kospi 200 Index was the most popular underlying for retail products over the month, featuring in 96 and attracting sales volumes of KRW154bn. In October, both the combination of Eurostoxx 50, HIS, S&P 500 and Eurostoxx 50, HSCEI, Kospi 200 indices featured in 61 products, with the first attracting a volume of KRW335bn.
LG Chem appeared mainly in combination with the South Korean benchmark in products that were issued mainly by Hanwha Securities. The increased interest in the world's largest automotive battery maker follows its decision to take on Elon Musk's Tesla in US home power storage through a partnership with Sunrun, a rooftop solar company. There was also an increase in interest towards US companies, particularly the shares of Apple, Facebook, Amazon, Alphabet, Tesla Motors and Oracle.
Similar to September, a little over 80% of retail products issued in October were equity-linked with an increase in both issuance and sales volume. Derivatives-linked products continued to be on the rise with a slight increase in issuance and a 23% increase in sales volume to KRW607bn.
There are 427 products worth KRW1,190bn maturing in November.
The South Korea Market Review for October 2016 is available at the following link.
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