Japan's main structured products providers saw their activity hampered by movements in the capital markets, which hit a number of Japanese stocks. The sales volume in the country's retail market plunged 25% to JPY747 billion (US$6.7 billion) in the first half of this year from the same period a year ago, according to SRP data.

The volume between the January and June period for last year came in at nearly JPY1 trillion. The 444 products issued year to date has also fallen year on year compared to 467 products recorded in the first half of last year.

The drop in sales comes against a backdrop of languishing Japanese shares. While the S&P 500 gained almost 8% year-to-date, the Nikkei 225 Average was down around 2% this year. The Nikkei 225 index remained the most popular underlying during this period, attracting the largest sales volume.

SRP reviews the operating results for the April to June period of Mitsubishi UFJ Financial Group - the largest distributor of structured products in Japan, and Nomura Holdings, which is the country's largest financial broker.

Mitsubishi UFJ Financial Group was the largest distributor group in Japan in the first half of this year taking the lion's share in terms of sales. The bank marketed 38 products worth JPY237 billion. All products are capital at risk with the majority of them linked to either a basket of indices or a single index. The bank also acted as bond provider in 14 of the products.

The group's net operating profits were down nearly 20% in the first quarter ending in June this year from the same period a year earlier. Gross profits also dropped by JPY61.3 billion in the April to June period from the same period in 2017. This marked a 6% decrease. The bank attributed the fall to a drop in net gains on debt securities relating to domestic bonds, although the loss was partially offset by increases in net interest income from overseas loans and deposits as well as fees and commissions.

Nomura Holdings also saw its second quarter net income plunging compared to the same period a year ago. The figure went down 91% in the three-month period ending in June to JPY5.2 billion. Japan's biggest brokerage took a hit in its profit after its wholesale business faced losses due to a slump in fixed-income as well as equity trading triggered by heightened market uncertainties. The brokerage said in a presentation that its retail clients remained on the sidelines over concerns about a trade war between the US and China. The bank added its fixed income revenues dropped due to uncertain market conditions and an adjustment in emerging markets. Nomura's wholesale business - that includes investment banking and global markets - had a JPY7.4 billion pre-tax loss. That of retail division dropped 20% to JPY19.9 billion compared to the same quarter last year.

In the structured products market, Nomura was the 11th largest distributor group in the retail market. The bank distributed eight products, worth JPY20 billion. The bank was both the distributor and the bond provider for only two products with exposure to different underlying assets. Nomura failed to make it to the top 10 issuer ranking in terms of sales volume.

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