The steady flow of updates from Asia Pacific continues, while in Europe autocalls saw their market share increase by 15% in 2021.
According to UOB executive director and head of treasury products & specialists John Lau, 2021 was ‘another record year’ for the structured notes business at the treasury division of UOB as the products delivered a 20% increase in pre-tax income year-on-year (YoY). Meanwhile, the autocallable-dominated products accounted for nearly one fifth of the total AuM at the treasury division as of December.
He added that Hong Kong-listed tech stocks formed around 20% of the total sales volume of structured notes at UOB in 2021, which was a ‘fair amount’ given the sheer Chinese economy size.
In 2021, the trading volume of China interbank OTC derivatives reached CNY158.7 trillion, up 15.6% year-on-year - Thomas Fang, UBS
In November, UOB pivoted into equity exposures in consumer discretionary, sustainability and more recently, financial institutions across the US, Europe and Asia-ex Japan. US equity underlyings remain the commercial bank’s bread-and-butter as it continues to enhance its portfolio diversification across asset class.
Staying in Asia, Roger Meier, head of structured products advisory & solutions Apac at Bank Julius Baer, in Singapore, has parted ways with the Swiss private bank. He was responsible for managing the structured product business in Asia and led the advisory and structuring teams in Singapore and Hong Kong covering equity, FX, commodities and rates / fixed income structured products to private clients based on an open architecture approach.
Meier joined Julius Baer in Zurich in 2004. He relocated to Singapore in 2007 to build the FX structured products business for the Swiss bank. In 2010, Meier was appointed as head of structured products advisory Asia and was promoted to head of structured products advisory & solutions, Apac, in 2019.
UBS (China) has set up a team to offer structured solutions to local financial institutions to hedge their exposures to foreign currencies (FX) and interest rates.
The currencies consist of US dollar, euro, pound sterling, yen, Australian dollar, Swiss franc and Canadian dollar while interest rates include main FX benchmark interest rates, such as the US dollar fixed term swap agreement rate (CMS).
‘In 2021, the trading volume of China interbank OTC derivatives reached CNY158.7 trillion, up 15.6% year-on-year, representing the most significant part of the total OTC derivatives market in China. The trading volume of exchange-traded derivatives was CNY582.1 trillion in the same year, up 33% from 20201,’ said Thomas Fang, head of China global markets at UBS.
The expansion comes as Chinese wealth management products (WMP) shift to the net asset value model required by the 2018 asset management rules (资管新规), which came into effect from this year with the aim of breaking the ‘rigid redemption (刚兑)’ at commercial banks.
BBVA Quantitative Investment Strategies (QIS) has expanded its range of underlyings with the launch of the new Solactive BBVA Resource Scarcity index. The index launched in partnership with Solactive is aimed at capturing alpha from the resource scarcity megatrend and selects companies harnessing nature’s most unscattered riches including easing water and food supply, improving forestry and mineral harvesting, managing urban physical space and providing the energy of tomorrow.
With the SRP Europe Conference due next month, SRP took a closer look at how the European market fared during 2021.
Sales volumes of publicly offered products across Europe increased by 10% year-on-year (YoY) to an estimated US$77.1 billion in 2021. Sixty-seven percent of this total came from products with a knockout feature, which increased their market share by 15% compared to 2020. Athena autocalls were the number one payoff solution in 2021, with a 33% share of the market by sales volume (2020: 23%). Reverse convertibles, in second, with a 24% market share, remained level compared to the previous year, as did Phoenix autocalls (20%). The highest decrease was registered by participation products, which were down nine percent YoY.
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