Some clouds have appeared on the structured product horizon.

Net profit at HSBC increased 150% to US$14.7 billion in 2021 year-on-year (YoY) driven by ‘a net release of expected credit losses and other credit impairment charges and a higher share of profit from [its] associates’. Revenue dropped two percent to US$49.6 billion primarily reflecting the impact of lower global interest rates and a decrease in revenue in markets and securities services. 

Asia has kept a safe lead as the top profit centre for the UK bank, led by CEO Noel Quinn, since it first announced the relocation of its structured product manufacturing hub to Hong Kong SAR in early 2020.

Amundi reported good levels of activity in active and passive management with structured products the only negative due to the high level of early redemptions

However, the first quarter of 2021 year-to-date seems to show a slow down amid the high market volatility, particularly for in Hong Kong SAR and China. The UK bank has launched 891 ELIs, a plunge from the 2,037 in Q1 21. In China, HSBC has issued and distributed 77 structured deposits from January to 15 March, which was higher from the 56 in Q1 21 but at a distance from the average quarterly issuance of 109 in 2021.

Structured products collected sales of €411m on the primary market in Belgium during the fourth quarter of 2021, according to the latest figures released by the Belgian Structured Investment Products Association (Belsipa). Volumes decreased by 59% year-on-year (Q4 2020: €1 billion) but were up by six percent compared to the prior quarter (Q3 2021: €387m).

Turnover of structured products sold on the secondary market in Belgium amounted to €348m, which is a quarter-on-quarter decline of 22% and a decline of 23% when measured on an annual basis.

Amundi reported good levels of activity in active and passive management with structured products the only negative due to the high level of early redemptions. It has seen positive net inflows of €65.6 billion in the fourth quarter of 2021, driven by medium/long term assets (MLT), retail, a recovery of treasury products, and joint ventures. In the French networks, inflows, at €100m, were slightly positive in the quarter despite persistent outflows of €1.4 billion in structured products, which experienced a very high level of early redemptions triggered by favourable market conditions. For full year 2021, Amundi registered €4.8 billion of outflows in structured products. 

It’s revolving doors time at Citi, with two announcements made in the past week. Dan Keegan, co-head of equities and securities services (ESS), head of North America markets and securities services (NAM MSS) and CEO of Citigroup Global Markets (CGMI), is leaving the US bank to launch an investment fund focused on financial technology companies. According to an internal memo seen by SRP, Mike Saraceni, the head of North America investor sales and relationship management, will fill replace Keegan as head of North America markets on an interim basis as the bank looks for a successor.

It has appointed Julia Raiskin as Asia Pacific head of markets, replacing Stuart Staley who was named co-head of global foreign exchange. She joins the Asia Pacific executive committee and reports to Peter Babej, Apac chief executive officer, and Carey Lathrop and Andrew John Morton, global co-heads of markets.

Korea’s Financial Supervisory Services (FSS) has issued an investor warning on the inverse and leverage (I&L) exchange-traded notes (ETNs) linked to crude oil and Nickle in view of their high disparate ratio. The move comes after five inverse ELNs linked to commodities were either designated as ‘investment risk issues’ or saw their trading suspended during the past two weeks.

The Hang Seng China Enterprises Index (HSCEI) settled 12.5% higher at 6,889 points on 16 March after falling to 6,134 points a day before, which represented a 25.1% decline year-to-date or down 38.2% from the 11,144 points year-on-year. The index hit a 10-year low on 15 March before a mild rebound threatening knock-in barriers across the South Korean market and beyond.   

“The HSCEI is having a horrible start of the year 2022,” said Eric Barthe, head of financial engineering at Anova Partners and ex-managing director at Leonteq. “The combination of the early regulatory crackdown, new lockdowns in China [triggered by] a Covid resurgence and the risk that the Russia-China ties may impact Chinese economy weighted heavily on the Chinese equity index.”