Maybank loses its top position in Malaysia

Malaysia's structured products market has grown significantly in 2018 with issuance and sales up by 41% and 65%, respectively, on an annual basis, according to SRP data. Issuance increased from 393 to 555 products year-on-year, while sales volume went up from MYR5.3bn (US$1.3bn) to MYR8.8bn.

In terms of asset classes demand for structures linked to FX Rates remains with 90 products marketed worth MYR5.4bn, up from 45 products worth MYR2.7bn sold during the same period last year. The sales volume of these structures represent 62% of the market's total sales year-to-date.

In addition, sales of products linked to hybrids and commodities also went up 100% year-on-year, while those of linked to single share equities increased by 57%, from MYR1.1bn to MYR1.7bn. On the other hand, the sales volume of structures with interest rates underlyings decreased by 33%, from MYR900m to MYR600m, while issuance remained flat at 12 products. Products linked to single index equities saw a 7% decrease in sales experienced also, from MYR174m to MYR162m, while the issuance of such products increased slightly by 8%.

In terms of underlyings, the Hang Seng Index and the FTSE Bursa Malaysia Index went head to head with 22 products worth MYR66m apiece. Products linked to FX rates and gold or a combination of both lead the game with total sales volume of MYR6.3bn. Malaysian investors have also showed a strong inclination towards stocks of the local low-cost airline company AirAsia, so far in 2018, preferred are the stocks of the agricultural company Felda Global Ventures and the automotive DRB-Hicom, both with sales of MYR33m year-to-date.

On the other hand, though the market experienced a slight shift in payoff types, dual currency structures remain preferred by the local investors in Malaysia with sales of MYR3.9bn, up 105% from MYR1.9bn. Callable plus uncapped call structures also gain momentum with 396 products worth MYR1.2bn year-to-date, up from 296 products worth MYR888m. Additionally, investors have shown less interest in accrual plus callable plus range products, with sales going down 33%. Sales of digital and reverse convertible structures has doubled to MYR900m.

Structured warrants continue to dominate the market YTD with 423 warrants worth MYR1.3bn, up from 321 warrants worth MYR963m. However, in terms of sales, structured deposits rank first with 114 products worth MYR6.6bn, up from 63 products worth MYR3.9bn in the same period last year.

Additionally, all of the issued structures YTD feature short investment terms including 387 short-term and six medium-term structures worth MYR4.7bn and MYR600m, respectively. Non-capital protected products dominated sales with MYR5.2bn sold, and 60 capital protected products worth MYR3.6bn.

Kuala Lumpur-headquartered RHB Bank remains the top distributor of structured products in Malaysia with sales volume of MYR2.9bn from 130 products YTD, compared to 96 products worth MYR1.6bn issued during the same period of 2017. The bank reported a record increase in net profit of 18.1% in the first quarter of 2018, with retail banking achieving a 6.1% growth in revenue.

CIMB, with 68 products worth MYR1.4bn, up from 52 products worth MYR738, comes second among all the eight active distributor groups in Malaysia. A noticeable change compared to the same period of last year is that while in 2017, Maybank ranked second, the performance of the bank so far in 2018 ranks it fifth with 51 products worth MYR717m, down from MYR990m in the same period last year.

Maybank is working with third party issuers to ensure that investors receive competitive and bespoke structured products payoffs that suit client portfolios, said Alice Tan, head, products and investment solutions at Maybank, in a recent interview.

Sydney-headquartered Macquarie Group has a strong presence in Malaysia and at the end of June issued its 1000^th warrant in the market there. The bank ranks first in terms of issuance with 156 products worth MYR468m year-to-date, up from 114 products worth MYR342m. The Australian bank dominates the market for warrants in Malaysia and structured warrants turnover increased to an average of MYR97.5m per day for the first five months of 2018, compared to an average of MYR25m in 2017, with daily turnover hitting a high of MYR613.1m on April 6, 2018, which represented a 40.2% of the total turnover on the Bursa Malaysia for that day. "The enquiries that we receive these days from investors indicate that they are improving their understanding and becoming more knowledgeable towards warrant pricing," said Barnaby Matthews, head of equity derivatives products for Macquarie in Asia.

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