Worst-of baskets on benchmark indices have dominated the South Korean market in 9M2021.

Some 14,713 structured products worth KRW60.3 trillion (US$53.5 billion) were issued in South Korea during the first nine months of 2021 – almost equal, both by issuance and sales volumes compared to the prior year period (9M2020: KRW60.4 trillion from 14,221 products).

The 7,619 products linked to a worst-of basket attracted a combined volume of KRW38.4 trillion – the equivalent of a 64% share of the total market. Of these, more than 6,500 products were linked to a worst-of basket comprising up to three indices, including various combinations of S&P 500, Eurostoxx 50, Hang Seng China Enterprises Index, Kospi 200, Nikkei 225 and Hang Seng Index.

Structures linked to interest rates held a market share of 12.4%. There were 615 such products in total (KRW7.5 trillion), with the vast majority tied to the Certificate of Deposit Rate 91d (506 products).

Single shares captured 8.8% of the market, collecting KRW5.3 trillion from 751 products, with the stock of Samsung Electronics the most frequently used.

Next were market cap indices, with a 7.6% share of the market (KRW4.5 trillion from 1,407 products). They included Kiwoom Dream ELB 205, the bestselling product of the period, which sold KRW321.45 billion. The one-year digital is linked to the Kospi 200 and offers a capital return of 102.5% if the index closes at or above 150% of its starting price on 29 December 2021.

Credit was also in demand, with 539 products (KRW4.1 trillion) issued in the first three quarters. They were mainly linked to the credit risk of companies from the civil engineering, real estate, utilities, travel & leisure, and insurance sectors.

The ‘others’ category included 15 products linked to appreciation of the US dollar relative to the Korean won; 13 products linked to commodities (gold, WTI crude oil); and 12 products linked to S&P Economic Cycle Factor Rotator KRW Hedged Index.

Check out the below chart for the preferred underlying assets of the Korean investor.