Adib follows up on carmakers play

Abu Dhabi Islamic Bank (Adib), is marketing a new capital-protected note in a move to capitalise on the success of an earlier tranche linked to car manufacturing shares, issued by the bank earlier this year.

The 18-months fully protected digital structure will pay a 10% return at maturity if all the components of the underlying basket (Toyota Motors, Hyundai, KIA Motors, BMW and TATA Motors) are at or above their strike levels at maturity.

According to Adib, the automobile sector performed well in 2013 and during the first quarter of 2014, sustained by recovering demand in Asia and the US.

“Despite the share price rises in 2013, the majority of sell-side analysts retain “buy” recommendations on the major auto stocks,” it said.

Adib is using a recent JPMorgan research note which predicted a cyclical upturn for the global auto industry to promote the product.

Adib said that this is the latest addition to the bank’s range of structured notes which are being “well received” by investors.

“This latest offering is part of Adib’s wealth management approach to provide customers a diversified suite of investment solutions,” said Adib in a statement. “The strategy involves developing and delivering best-in-class investment solutions tailored to meet the financial needs of customers through effective financial planning and asset allocation.”

In January, the bank issued its first capital-protected car manufacturers note, with an expected return of 8%.

Previous investment products include three capital-protected gold notes and two capital-protected oil notes that matured at the beginning of 2013. The one-year gold note produced a total return of 15%, while slightly lower-risk notes returned 4% and 6%. One of the two-year oil notes produced a 17.9% return, with the other generating a 1.21% return.

The note is currently open for subscription with a minimum amount of US$30,000.