The Finnish holiday season well and truly started with just four regular tranche products added to the SRP Finland database during July. One-hundred and eighty products worth €382m had strike dates during the first seven months 2016, down, both in issuance and sales volumes, from the 256 products with sales of €790m that were available to the Finish investor during the same period last year.
"So far this year we have seen decline in volumes in all markets, mainly owing to unfavourable market circumstances," said Mikael Axelsson, chief executive officer at Garantum. With the equity markets in roller-coaster mode, investors understandably become rather cautious "but as we have seen during previous crises and difficult circumstances, structured products with their unique flexibility will continue to offer attractive alternatives tailored to investor needs and views", according to Axelsson.
"Consequently, our expectation is that the Finnish SP market will pick up again during the autumn and that we will witness a further growth in 2017."
Alexandria Pankkiiriliike, which was responsible for two of this month's offerings, has been the most active distributor in Finland this year with 28 products, followed by Danske (26), Garantum and Nordea (21 each). Danske just pipped Alexandria in the sales tables, selling €78n worth of structured products between January and July (Alexandria €74m).
Danske also proved to be the most prolific counterparty this year, with a share of 35% of the Finnish market, selling €132m from 49 products distributed via Alexandria, Evli Pankki, Finlandia, Garantum, SP Kapitaali, WallStreet Asset Management and the bank's own distribution channel.
Eleven products had strike dates in July. Of these, Pohjola Yrityskorko Amerikka III/2016, was the best-seller. The five-year credit-linked note (CLN) which is linked to the Markit CDX North America High Yield Index sold €3.25m during its subscription period.
Danske Bank Osakeobligaatio Maailma X FE26B, which was linked to an equity basket comprising ten global stocks, was the second highest seller, collecting €2.73m between June 1 and July 13.
Forty-two products matured during July, including offerings from Danske Bank, eQ Varainhoito, Garantum Fondkommission, Nordea Pankki and WallStreet Asset Management.
Garantum's Osakeobligaatio USA nro 999 Kasvu ended up the best performer. The capital-protected note, which was linked to a basket of 10 US stocks, returned 186.27% after five-years (13.09% per annum).
"We were bullish on US stocks in general during this period," Axelsson explained. "At the same time we were also convinced that US exporters with their strong consumer brands would benefit greatly from a global recovery and the expected growth in consumption in emerging markets," he said.
There is an attractive combination of risk and return in the capital protected products, according to Axelsson. "Investors appreciate the opportunity to earn equity returns with very limited downside," he said.
The Finnish market continues to be dominated by equities, with a basket of shares the preferred option, while the demand for credit is also on the up.
Good investment themes are really few and far between these days, according to Axelsson. "There is a lot of talk about commodities, but we are not so sure - maybe some upside near-term due to speculative flows. I personally think there will be more risk off ahead and therefore market neutral strategies should make a come-back very soon."
Finland Market Review - June 2016
Product snapshot: UB Omaisuudenhoito CLN Finland's best seller in May
Finnish investors reach out for US high yield, lured by high coupons