The primary objective for investors in the current market environment should be capital preservation with return being a secondary consideration, according to UBS.

The Swiss bank’s chief investment office (CIO) believes that market-linked certificates of deposit (MLCDs) and market-linked notes (MLNs) in the US are ‘especially effective as a part of a bond ladder in [investors’] liquidity strategy, where assets are earmarked for spending over the next three to five years’, stated UBS on its investment strategy insights last week.

With higher starting yields and lower equity valuations, the medium-term outlook for both stocks and bonds has improved

Since the launch of the ‘enhancing liquidity strategy return potential with MLCDs and MLNs theme’ in March 2021, structured investments with downside protection have helped it outperform both stocks and bonds.

‘With higher starting yields and lower equity valuations, the medium-term outlook for both stocks and bonds has improved,’ stated the bank. ‘Even so, these investments still carry the risk of significant capital losses over a shorter time horizon.’

SRP registers 6,493 live retail structured notes issued by UBS in US with a total traded notional of US$12.6 billion. Majority of them were distributed in-house while the remaining by 14 other banks.

China’s structured deposits outstanding balance remains stable

The outstanding balance of structured deposits in China has reached CNY5.3 trillion as at the end of October, representing a 1.8% decrease from a month ago, according to the latest data from the Chinese central bank. The amount was down 4.3% year-on-year or translated to a 55.9% decrease from the peak seen in April 2019. Large start-owned banks and medium & small-sized banks accounted for 33.8% and 66.2%, respectively.

Corporates remain the main contributor to the outstanding balance compared with retail as they make up 69.9% and 67.7% for the two types of banks, respectively. A source at a joint-equity Chinese bank, which is classified as medium & small-sized bank by the central bank, told SRP that the regulators have not come up with new guidance on the outstanding balance of structured deposits at the bank following newly introduced requirements last year.

The entire outstanding balance at the year-end is expected to keep at a stable level, according to the source. 

SGX reports record derivatives daily average volume

Derivatives volume across multiple asset classes climbed to new highs amid increased trading activity by global institutions in October, as optimism that central banks may moderate their interest-rate hike cycles countered concerns over China’s economic outlook, according to the latest report from Singapore Exchange (SGX) released on 14 November.

Derivatives daily average volume gained 23% year-on-year in October to 1.2 million contracts, the highest since March 2020. Total derivatives traded volume across equity, foreign exchange (FX) and commodities was up 21% from a year ago at about 22 million contracts.

Specifically, the SGX equity derivatives suite of Asian benchmark index futures saw robust activity in October, as volume rose 15% to 15.3 million contracts year-on-year.

BNP Paribas rolls out Exane in US

The French bank has launched BNP Paribas Exane, a provider of equity research in the US following its acquisition of Exane last year. The move ‘enables the bank to offer its clients a full suite of cash equities and derivatives services,’ to the bank’s Securities Corp clients in the US. BNPP Exane will increase its coverage from 180 US stocks to approximately 450 US stocks by 2025 across the technology, media, and telecommunications (TMT), consumer, healthcare and industrials sectors.

The expansion will be supported by the bank’s plans to grow the number of analysts, sector specialists, traders, sales traders and salespeople it employs. BNP Paribas Exane currently covers over 800 stocks globally.

‘Our ability to offer BNP Paribas Exane to clients in the US is an enormous opportunity to holistically meet our clients’ needs and service the full equities value chain across research, financing, execution and derivatives,’ said Adil El Batji, Head of Global Equities in the Americas at BNPP.

AllianzIM expands suite of buffered ETFs

Allianz Investment Management, a wholly owned subsidiary of Allianz Life Insurance Company of North America, has launched a monthly series of U.S. large cap buffered exchange-traded funds (ETFs) suite, starting from November. The two new ETFs are the AllianzIM US Large Cap Buffer10 Nov ETF and the AllianzIM US Large Cap Buffer20 Nov ETF.

The buffered ETF solutions seek to provide downside risk mitigation through a buffer against the first 10% and 20% of market losses and offer upside potential by tracking the share price returns of the SPDR S&P 500 ETF Trust up to a stated cap.

Offered at an expense ratio of 74 basis points, AllianzIM’s suite of buffered ETFs with six- and 12-month outcome periods provide the opportunity for investors to invest in ETFs with new caps and buffers every month. The 12-month outcome period of the November series ETFs will be 1 November 2022 to 31 October 2023.