Standard Chartered Bank Malaysia has launched a form of financing to help investors beefing up their investment by 1.5 to nine times, depending on the investment assets invested. The bank's Wealth Power platform allows investors to increase exposure to bonds, unit trusts, structured investments and insurance products for a higher potential return.

The facility is exclusively available only to Priority banking customers (qualifying investors) of the bank and is available in seven different currencies including Malaysian ringgit. "Standard Chartered has shortlisted a fund focus and a bond focus list that are complementary with Wealth Power," said Danny Chang (pictured), executive director and head, managed investments & products management at Stanchart Malaysia.

"We have backtested the universe of fund list by determining the most suitable funds that are less prone to maximum drawdown "This can minimise the possibility of margin call for Top Up and Sell Out scenarios as the funds or bonds in the focus list have no top-up/sellout scenarios over the past three years based on historical performance."

Structured products penetration levels as a percentage of banking deposits remain low, according to Chang. However, in-house manufactured structured investments (principal and non-principal protected), one of three key areas in Stanchart wealth management in Malaysia, will also be covered by the facility, according to Chang.

"Aside from (still) low investor knowledge, the low penetration is due in part to the high net worth individual classification which tends to exclude mass market segment from this product category," said Chang. "Locally, investors of structures onshore are required to testify that they have at least MYR3million in net worth."

The local wealth management landscape remains fragmented with "foreign banks offering greater breadth and width across structures (including non-principal protected) and underlyings", said Chang. Local banks generally focus around principal protected structures as a deposit alternative, according to Chang. "Given the higher managed investment penetration in Malaysia, we have also begun to see the advent of fund linked structures," he said.

Structured products were first introduced in Malaysia about 12 years ago via the principal protected structured deposit (called structured investment in Malaysia). Principal protected structures are still being used as a baby step transit for deposit-centric clients into investments, according to Chang. "Today, principal protected structured investment remains popular; although the last half decade has seen equal interest in non-principal protected structures locally," he said.

Within protected structures, the most popular underlying for local clients remain local interest rates while currency remains the most popular for non-principal protected structures followed by foreign equities, according to Chang. "We have also seen the advent of credit-linked structures selectively across foreign financial institutions based onshore," he said. "A combination of greater investor education by the banks, growing foreign currency needs and recent weakness of the Malaysia ringgit has somewhat contributed to this."

Stanchart is also the latest structured provider in Asia-Pacific to launch digital advisory tools to support its wealth management offering. The bank's Advice facility is a digital tool for its relationship managers that integrates the private bank's entire suite of house views, comprising the bank's investment ideas across equities, bonds, funds, foreign exchange and derivative structured products. Standard Chartered sold 63 structured products worth over US$5.5bn in the Apac region in 2016, according to SRP data.

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