Phatra Securities created a structured note for institutional and high net worth investors banking in November that has proved to be the best performing product in the Asia-Pacific region in January. The two-month investment, which was linked to the shares of Bumrungrad Hospital, sold THB10m (US$290,073).
The client embedded a down-and-in option to finance the potential high yield, enjoying a high premium due to the volatility of the underlying. At the strike date, the annualised historical volatility of the shares was 28.83%, at a time when the Vix Index was at 15%. "The Thai market has experienced its lowest volatility in the last decade," said Chulawit Chaitachawong, assistant vice president at Phatra. "Moreover, the market is on a steady upward trend, which is good for yield enhancement products."
Despite the global mantra of diversification, investing in products linked to single stocks from Thai companies makes up 99% of the market, with the products that Phatra has sold in 2017 (all of which are linked to single shares) delivering an average annualised return of 132.86%.
Phatra sold 1,878 structured notes worth US$374m in 2016, of which 1,867 were linked to single shares, "[Phatra] is exploring the offering of products linked with foreign stocks, especially from Asian markets," according to Chulawit Chaitachawong, assistant vice president at Phatra.
Phatra Securities had 1,513 notes worth $316m maturing in 2016 with an average term of 0.39 years. Despite an average annualised capital return of 94.2, around 16% of the bank's products returned above 100% of the initial capital. The bank's products were among the best performing in the Asia-Pacific region in 2016, with one returning 114.386% in just a month.
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