HSBC HK & Taiwan issuance soars as focus shifts to Asia

HSBC has raised its non-flow structured product issuance by 64.4% and 7.3x to 2,506 and 517 products in Hong Kong SAR and Taiwan in 2020 year-on-year (YoY), respectively, as it plans to invest US$4.3 billion in Asia over the next five years.

SRP data suggests that the bank’s decision to move its structured products business from UK to Asia, announced in early 2020, is in process.

We have a bold but achievable ambition, to be Asia’s leading wealth management provider by 2025  - Nuno Matos, HSBC

The UK bank announced today its plan to invest US$3.5 billion in its wealth and personal banking (WPB) business as well as US$0.8 billion in global banking and markets in Asia. It is also seeking to hire over 5,000 wealth roles in the next five years.

HSBC is expanding its distribution capabilities to target high net worth (HNW) and ultra-high net worth investors (UHNWIs) mainly in China, Hong Kong SAR and Singapore. Asia generates nearly half of the bank’s US$1.6 trillion wealth balances and 65% of the group’s wealth revenues.

The new hires include relationship managers, investment counsellors and specialists to support the client group in Premier, Jade and private banking. They cover up to 3,000 wealth planners to scale a new mobile wealth planning service in China.

In Hong Kong SAR, the bank aims to capitalise on the Greater Bay Area’s new ‘wealth connect’ scheme to provide HNWIs and UHNWIs a broader access to wealth products.

‘We have a bold but achievable ambition, to be Asia’s leading wealth management provider by 2025, supporting Asian, international and HSBC-connected clients, wherever their wealth is created, invested and managed,’ said Nuno Matos (pictured), CEO of WPB.

HSBC Holdings reported a net profit of US$6.1 billion in FY20 ended in December 2020, down 30% YoY, as its revenue fell by 10% to US$50.4 billion mainly due to ‘the progressive impact of lower interest rates across our global businesses, in part offset by higher revenue in global markets’.

Asia

Hong Kong SAR remains the most active market in Asia for HSBC Bank where it has increased the issuance of listed warrants and callable bull/bear contracts (CBBCs) by 48.5% and 23% to 288 and 2388 products in 2020 YoY, respectively. This is in addition to the 2,506 investment-linked equity (ELI), SRP data shows.

For the ELI, IPOs on the Hong Kong Stock Exchange quickly became the most featured underlyings in 2020 including Alibaba and JD.com. The two e-commerce giants’ shares were linked to 374 and 167 products, respectively. Tencent (H shares) kept its runner-up position appearing in 230 ELI followed by NYSE-listed HSBC, which handed over its crown to Alibaba in 2020.

Tracker Fund of Hong Kong, NetEase (H shares) and Meituan Dianping made it into the top 10 underlying list in 2020 while China Merchants Bank (H shares), AIA and Industrial and Commercial Bank of China slipped down, according to SRP data.

Taiwan saw the most significant jump of non-flow products worldwide amid the market’s overall scaleup, making the UK bank the second largest issuer after DBS Bank.

The 517 unlisted notes were linked to unspecified share baskets with knockout, snowball as the most common payoff. There were 34 reverse convertible notes and 13 notes had an accrual option.

For the issuance, 460 were distributed in-house while 56 by UBS and one by BNP Paribas. Most of the products had a tenor of less than six months with some products having investment terms of one month.  

Meanwhile, HSBC China has issued and distributed 529 structured deposits with at least 90% of principal protection in 2020, down 6.2% YoY. New underlyings on the bank’s offering included the  HSBC Low Beta Factor ESG Europe Price Return Index, HSBC VantageZ Index (USD) Excess Return and the Allianz US Short Duration High Income Bond AT H2-EUR fund.

In the meantime, the UK bank cut down its issuance in Japan to 36 from 62 YoY, with the Nikkei 225 and S&P 500 remaining as the most popular underlyings, followed by shares of Fujitsu, Fast Retailing and Nidec in 2020, which replaced shares of Dmg Mori Seiki, Takeda and Sony. The unlisted notes were distributed by eight Japanese securities houses led by SBI Securities.   

USA

In the US, HSBC Bank marketed 1,054 non-flow products worth US$3.47 billion in 2020, down 24 or 2.2% YoY as an 18.3% increase of unlisted notes was offset by a 1.8x decline of certificates of deposit (CD).

The UK bank issued 52 CDs with a sales volume of US$83m, which were linked to 22 underlying assets led by shares such as Home Depot, Amazon, AT&T, JPMorgan Chase and McDonalds. The number of CD tied to the HSBC Vantage5 ER Index and S&P 500 - the most featured underlyings in 2019 - fell to nine and five, respectively.

Global headline indices such as the S&P 500, Russell 2000 and Dow Jones Industrial Average Index remained the most favoured underlyings featuring in 1002 unlisted notes worth US$3.39 billion. In the meantime, the S&P 500 ESG Index stood out as a new underlying and was linked to 35 products in 2020.   

Europe

HSBC shrunk its offering of leverage products and non-flow notes in Europe in 2020 where the latter posted an issuance in UK (42 products), France (three products), Germany (three products) and Austria (two products), SRP data shows.

As a leading issuer of structured products listed on Frankfurt Stock Exchange and Börse Stuttgart, HSBC Trinkaus & Burkhardt has also reduced its issuance of close-end leverage products by 26.6% to 15,364 while increasing its offerings of open-end leverage products by 43% to 89,090 in 2020.

The majority of these products were made available in Switzerland where the two types experienced an issuance decline of 67% and 59.9% to 6,911 and 24,998, respectively, according to the data.

A bright spot was seen in the Austrian market, which saw the debut of 440 and 2,378 close-end and open-end leverage products, respectively – prior to 2020, the most recent leverage product SRP registers was launched in January 2014.

The German arm of HSBC also launched 36,616 flow notes listed on the bourses in 2020, up 34.2% YoY. Among them, the offerings available in the Swiss market dropped by 75.4% to 6,688 while those in Austria surged from 15 to 15,212, SRP data shows.

Click the link to read HSBC Holding’s FY20 annual report.