In the week we celebrated our Asia Pacific Awards 2022, we looked at some of the major global issuers’ Q1 results and analysed recent news surrounding Netflix.
Société Générale has posted revenues of €7.3 billion for the first quarter of 2022 – an increase of 16.6% year-on-year (YoY). In a volatile environment, the global markets business encountered its best quarter since 2009, driven by good client activity and the rise in rates. Revenues amounted to €1.8 billion, up 21% compared to the prior year quarter. Revenues in the equity activity, at €1 billion, were up 20% YoY, with strong client activity in listed products and prime services. The structured products portfolio remained stable, with good risk management.
Société Générale issued 423 publicly offered structured products on the primary market (across nine different jurisdictions) in the first quarter of 2022 (Q1 2021: 801 products).
Fellow French lender BNP Paribas posted revenues of €13.2 billion in the first quarter of 2022, an increase of 11.7% year-on-year (YoY). At €4.7 billion, revenues in corporate and institutional banking (CIB) were up by 28.1%. Revenues in the global markets business, at €2.8 billion, were up 52.8% compared to the first quarter of 2021. Activity on the fixed-income, currency and commodities markets was very robust, with strong demand from clients, for their reallocation as well as hedging needs. Global markets also achieved a high level of activity in prime services and cash equities with strong momentum in derivatives, in particular in structured products, early in the quarter.
Structured note issuance in Taiwan has dropped 29.1% to 5,727 from January to April compared with the prior-year period. Credit Suisse overtook DBS Bank as the most active issuer by accounting for 24.3% of the entire new products, or 1,391, in the first four months of 2022 year-on-year (YoY) despite a decrease from 1,696 issuances, according to SRP data.
DBS retreated to the second place with an issuance of 1,380 during the same period, 95% of which was distributed in-house – the figure has more than halved YoY.
Out of the total 12 issuers, only UBS, Nomura International Funding, Citi and Goldman Sachs increased their issuance from January to April, SRP data shows. Nomura and Goldman Sachs saw significant growth in the Taiwan market year-to-date on the back of 191 and 57 products, respectively – their respective issuance included two and one launches in the prior-year period.
Barclays has poached a senior strats executive from Goldman Sachs to head up its quantitative trading unit, as part of the UK bank’s plan to builds out its equities business. Aytac Ilhan has joined the UK bank as head of quantitative investment strategies (QIS). She will have responsibility for automating platforms for the Corporate and Investment Bank’s (CIB) index business and developing investment solutions for clients. Based in London, Ilhan reports to Ashish Prabhudesai, Barclays’ global head of equity derivatives.
Ilhan joins from Goldman Sachs where she was a managing director, global head of systematic trading strategies desk and head of Europe, the Middle East and Africa equity derivatives desk strats.
Barclays is expanding its equities unit as some rivals including Deutsche Bank and Credit Suisse scaled back.
US TV and film streaming company Netflix is the latest high-profile name to experience difficulties in the stock market.
Its stellar growth in the last few years and high visibility gave it frequent coverage in the financial press. The main growth period of Netflix started from the beginning of 2020 with the stock at US$330. It reached a high of US$680 in November 2021. A sharp increase in the number of Netflix subscribers led to greater earnings and rapidly increasing market P/E ratings which propelled the stock to such heights. The main rationale was that in the virtual and budget conscious world that consumers now found themselves in low-cost technology-based solutions were a clear winner.
However, from the end of 2021 the picture for Netflix changed quite suddenly as can often happen in such investment bubble scenarios. Netflix stock is now currently trading at around US$180, representing a fall of nearly 75% from the peak.
With its high volatility, growth story and brand name in the market it is not surprising that Netflix has proven a popular underlying for structured products in the last few years. Data from www.structuredretailproducts.com shows that there are around 1,250 live products linked to Netflix.
Not surprisingly, the biggest market is the US with over 500 products and a total of US$1.2 billion notional. Other markets with sizeable issuance in Netflix linked products include Spain, Switzerland, Italy, Taiwan and South Korea.
Find out more here.