This year, private banks in Asia experienced an industry-wide downturn in transactional activity and, in particular, in the appetite for equities. After a tumultuous 2015 for Chinese stocks and an ominous start to 2016, Asian HNWIs have, understandably, shied away from the asset class. Providers that have long-benefited from regional home biases have been undermined by investor disengagement.
Volumes for Asia equity-linked structured products, in the second and third quarter, were particularly muted. This was in spite of stronger emerging market equity performance, driven by earnings growth and, in part, by the prospect of an Indian GST bill (India represents approximately 10% of the MSCI Asia ex-Japan benchmark) – that was eventually passed.
“This year, clients continue to favour simple trading ideas on familiar structures. Even though activity in the second and third quarters was slow, we observed a fair amount of big-ticket trades on such structures,” says Patricia Lau, head of equity derivatives sales for Hong Kong and Singapore at Credit Suisse. “Such a trend has been evident especially after the market stabilised in the fourth quarter.”
In addition, regional clients were increasing activity by adjusting structures to meet investment objectives, rather than taking bold bets driven by confident views.
“We’ve seen a significant increase in the usage of our automated pricer this year,” Lau adds. “It has become customary for clients to explore the pricer and tweak the parameters of structured products, such as knock-out levels, strike levels or tenures to optimise the payout and meet their needs.”
This year, the industry has once again acknowledged Credit Suisse’s position as a leader in Asia equity-linked structured products, for its broad range of offerings and longstanding commitment to private banks in the region. Lau says that her clients should look forward to an expanded offering next year which includes hybrid notes that could include simple features, such as an FX overlay on an ELN, to further enhance yield.
Asian Private Banker congratulates Credit Suisse for securing the industry’s vote as Best Provider of Asia Equity-linked Structured Products – for the fourth consecutive year.