Asia Pacific trends, product barrier analysis and our latest personality of the year all featured in this week’s news roundup.
Highlights from our coverage of SRP’s 2023 Asia Pacific conference continues below.
A panel of executives from the region’s value chain discussed how the cross-border structured products market has shifted after China's reopening post Covid-19. The discussion kicked off with Karrie Fung, head of Wealth management sales and execution, Asia at Union Bancaire Privée (UBP) noting that offshore investors usually gain Chinese onshore exposure through structured products linked to Hong Kong-listed shares. She added that fixed income notes (FCNs) have been the bread-and-butter for income-focused investors.
The key question here is how [onshore] investors can invest in offshore or international structured products - Karrie Fung, UBP
"The key question here is how [onshore] investors can invest in offshore or international structured products. One of the key discussions we have today is the qualified domestic limited partnership [QDLP]," said Fung.
Elsewhere, there has been a "remarkable shift" of the risk environment on the institutional side this year compared with 2022 as the path of interest rates became clear, Bharat Sachanandani, head of ESG, solutions & product Strategy, global markets, Apac at Société Générale, told attendees of the conference.
"Everyone's looking for defensive strategies. There's a lot of chatter on recession. And people are trying to build portfolios that work across a variety of market downturns, like tail risk," he said, adding that these strategies resonate with structured product retail investors.
The Apac Personality of the Year Award 2023 was presented to Jung-Jin Yoon, managing director, head of cross-asset sales & structuring for Apac at Société Générale (SG). Growing up in Montreal and New Jersey, Yoon, a native of South Korea, returned to the country before kicking off his career at Macquarie Bank as a corporate finance analyst in Seoul in 2007. In 2013, Yoon relocated to South Korea overseeing the third-party distribution after SG obtained the relevant regulatory licences for its onshore operation where structured products were the first leg of the local expansion, followed by market access and flow activities.
"It's a team that's very dear to me," Yoon recalled, referring to the local setup. "We started from scratch - building the local infrastructure, transferring the activities from HK, and repositioning our franchise."
Vontobel has launched credit-linked notes (CLNs) on its deritrade platform to capitalise on rising interest rates and credit spreads. Since their debut on Friday 5 May, approximately 20 CLNs have been traded across Europe and Asia by their issuer Bank Vontobel Zurich or Vontobel FP Dubai, according to Georg von Wattenwyl, CEO of Vontobel Singapore and head of wealth management for Asia.
"The traded notional remains small, but we’ve had hundreds of pricings," Wattenwyl told SRP. "The kick-off is totally in line with our expectation based on our activity monitor, the number of
France’s Amundi reported adjusted net income reached €300m (US$327m) in Q1 2023, stable compared to Q4 2022, and down 7.5% from Q1 2022. The French networks posted positive net inflows of €2.7 billion, of which €0.8 billion in medium/long term (MLT) assets and €1.9 billion in treasury products. MLT inflows were mainly driven by structured products, at €1.5 billion.
A recent analysis piece from FVC’s Tim Mortimer looks at barriers. Structured products traditionally divide into capital protected and capital at risk offerings. For structured products the term capital protected is not generally taken to mean that there is no associated credit risk. Since most structured products are issued by investment banks as senior unsecured credit (“notes”) they carry the same credit risk as traditional bonds that many banks might also issue.
In many jurisdictions there is a deposit wrapper available in for capital protected products which subject to certain eligibility offer investors protection against issuer default up to the scheme limit. This further strengthens their claim to be fully protected.
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