Innovation took centre stage this past week, with several international investment banks launching new structures.
Société Générale’s upside generating element of its FTSE 100 Kick Out Plan - Issue 1 follows a familiar autocall structure and has a typical schedule of payments. The twist in the product relates to the downside risk and the calculation of the amount of capital returned in the case of a barrier breach. If the index is below 65% of its initial level at maturity, the investor will lose some of their capital investment. The amount of capital lost will depend on the number of days during the product term that the index has been below this barrier level.
HSBC has launched the Solactive Luxury Dynamic Factors 10% Daily Risk Control TR Index-linked private placement notes (PPN) in Hong Kong SAR and structured deposits in Malaysia, to capitalise on the growing luxury consumption in Asia after Covid-19. The EUR-denominated index also marks the first proprietary luxury-themed index in Asia offered by HSBC, which owns the exclusive licence. The bank will ‘shortly’ offer such exposure through structured deposits in China where luxury-themed stocks are not commonly used as underlying assets.
J.P. Morgan has issued a new range of structured notes linked to a J.P Morgan basket of companies which provide exposure to the cryptocurrency market via a basket of stocks. The Insight Notes follow a two-year capital at risk structure and will pay 100% participation on the performance of the underlying basket minus 1.5% basket deduction.
In South Africa, Ryan Sydow, former head of retail distribution at Absa Capital, the investment banking arm of Absa Bank, has joined Rand Merchant Bank (RMB) as head of retail, RMB Invest at Rand Merchant Bank. Sydow was also previously head of South Africa distribution at Barclays.
Staying with Barclays, Christian Treuer has joined the UK bank as co-head of Emea derivative distribution - global equities group. Treuer rejoined Barclays in January as a managing director and co-head of equity derivatives sales, to work alongside Andreas Konomis, co-head of equity derivatives sales Emea, SRP has confirmed.
Citi has appointed David Brown as Asia Pacific head of client executive and account management for custody and fund services. Based in Hong Kong, Brown has responsibility for client executive and account management teams across the region. He reports to Irimga McKay, global head of client executives and account management for custody and fund services, and David Russell, Asia Pacific head of securities services and Hong Kong head of markets.
In Belgium, sales volumes of structured products on the primary market amounted to €1 billion (excluding leverage products) in the fourth quarter of 2020, according to the latest figures released by the Belgian Structured Investment Products Association (Belsipa). Compared to the previous quarter, sales volumes increased by 31% but year-on-year (YoY) turnover was down by 24% (Q4 2019: €1.3m).
Over in South Korea, equity-linked securities (ELS) issuance has almost halved compared to 2019. Equity-linked securities issuance in 2020 has fallen to a record low in four years at KRW42.3 trillion (US$38bn), down 44.8% year-on-year (YoY). In the meantime, equity-linked bonds (ELBs) reached a five-year peak at KRW26.7 trillion, up 15.2%. The Kospi 200 stood out as the volume of ELS/ELB tracking the index grew 14.6% to KRW28.1 trillion in 2020.
In Singapore, the traded value of daily leverage certificates (DLCs) on the Singapore Exchange (SGX) dropped 20% to SG$204m in February month-on-month (MoM), going back to the level seen in December 2020. That figure was a 24% decrease year-on-year. Approximately 90.2% of the values were traded on stock underlyings while the remaining was on index underlyings. The 5x Long Xiaomi DLC remained the most actively traded stock DLC. In the meantime, the total traded volumes fell by 24.5% to SG$951m MoM.