Asian HNWIs for the most part did not enter markets early for the Trump rally; however signs of strengthening appetite in early 2017 led to a significant number of clients and volumes moving into equity-linked structured products referencing US assets. In addition to cash equities, private banking clients in Asia generally participated on the upside through accumulators and fixed coupon notes on US financial and tech names.
HSBC stood out from crowd this year, offering attractive pricing and payoff structures to capitalise on the bull market. According to HSBC’s director and Asia Pacific co-head of wealth sales, institutional & wealth sales, Simon Shek, one particularly interesting development was an uptick in client interest in structures linked with equity baskets.
“Aside from the more common structures, we also observed an increased client interest on worst-of structures over a basket of global names, enabling extra yield pickup through the correlation within a basket,” Shek says. “This is not new to the market, but through the development of different multi-issuer platforms, it is now much easier for our clients to find a price over a tailor made structure – for example, with Tencent and Alibaba and another interesting name of their choice.”
Products aside, the bank is also exploring enhancements in its operations to cater to a growing demand for US underliers.
“Some of our clients are setting up structured products night desks in order to capture this growing interest on US [underliers],” Shek says. “It is easier said than done as the private banks will need to ensure the same level of governance is in place after office hours. This is an area we are closely monitoring to ensure the right level of coverage is provided.”
Undoubtedly one of the most hotly contested categories given that US equity markets led the global rally early on, HSBC outshone its competitors, winning a strong vote of confidence from private banks in Asia to take the title of Best Provider of US Equity-linked Structured Products in 2017.