SRP in brief: many happy returns

The prolonged Hong Kong equities slump has kept investors agitated following the worse start of a calendar year since January 2016, which has hit hard those who invested in equity-linked security (ELS) in Korea.

As the number of products maturing from January to April 2024 increases, it is expected that the highest maturity volume of KRW3.4 trillion will occur in April 2024

Worries over three-year tenor products linked to the Hang Seng China Enterprises Index (HSCEI), the benchmark that reflects the overall performance of Mainland securities listed in Hong Kong, breaching their knock-in levels have continued to swirl as the index tumbled 4.8% over the past month and 22.5% over the past six months.

Analysts at Samsung Securities cited Koscom’s data in a January report to point that KRW 13.3 trillion (US$10 billion) worth of ELS – a majority of which is tied to the HSCEI – are set to mature in the first half of the year, while KRW8.5 trillion of products are due in the second half of 2024.

‘As the number of products maturing from January to April 2024 increases, it is expected that the highest maturity volume of KRW3.4 trillion will occur in April 2024,’ the Korean securities house’s analysts wrote in the note.

‘HSCEI-linked ELSs coming due in H1 24 are highly likely to suffer losses at maturity unless the index soars in [this period],’ the note read.

Swiss investment boutique ISP Group has announced the addition of Anja-Maria Moesli to its derivatives team. Based in Zurich, she will act as a senior advisor within the structured products & AMC division, actively servicing mostly Swiss clients and report to Fabio Oertle, ISP’s head of asset solutions.

Moesli joins from Credit Suisse where she was a senior member of the structured products sales team working with clients in all aspects of trading activities on international stock exchanges and trading institutions. She has more than 20 years of experience in structured products sales across all asset classes. Prior to joining Credit Suisse, she held various structured products sales positions at Citibank, ABN Amro, Clariden Leu and Zürcher Kantonalbank.

The Austrian certificate association (Zertifikate Forum Austria or ZFA) added Christian Vollmuth, Christian Scheid, and Monika Kovarova-Simecek to its advisory board at the start of the year.

Vollmuth is a qualified lawyer and has been the managing director of the German association for structured securities (Bundesverband für strukturierte Wertpapiere or BSW) since September 2022. Prior to that he was chief risk officer at Solactive and before that managing director at BSW’s predecessor, the German derivatives association (Deutscher Derivate Verband) between 2011 and 2017. Scheid has been working as a business and financial journalist since 2000 and as a freelance author since 2006, while Kovarova-Simecek is head of digital business communications at St. Pölten University of Applied Sciences.

On the innovation front, UBS launched on 7 February the first ever investment-grade tokenised derivative warrant on the Ethereum public blockchain network, a first for the Hong Kong market.

Linked to the shares of Xiaomi (HKG: 1810), the new call warrant uses the on-chain issuance product framework offered by UBS Tokenize, the bank’s in-house tokenisation service. It is ‘the first natively issued warrant on a public blockchain’ that was sold to OSL Digital Securities Ltd, a virtual asset platform and wholly owned subsidiary of Hong Hong-listed OSL Group (formerly BC Technology Group)’, according to UBS.

Staying in HK SAR, authorities there and in Mainland China have set up new guidance on the cross-boundary Wealth Management Connect Pilot Scheme (WMC Scheme), expanding eligible product offerings and quotas. The scope of the latest revision consists of an expansion of eligible product offering choices with higher risk ratings and high quotas for individual investors. It also allows securities firms to sell products which was restricted to just banks in the past, while clarifying the promotion and sales arrangements.

The revision on top of the original WMC Scheme demonstrates a positive narrative as it enables cross-border investment within the confines of People’s Republic of China’s capital controls, according to Richard Mazzochi, partner at King & Wood Mallesons.

Over in Sweden, local issuer Garantum has launched its 5,000th structured product in the market. The achievement was celebrated with a bell ringing ceremony at Nasdaq Stockholm where the product is listed. The 3.5-year Sprinter Buy the dip Sverige offers access to the OMX Stockholm 30 index. It is issued on the paper of UBS and collected SEK75m (US$7.1m) during its subscription period.

At the start of the investment, 50% of capital tracks the performance of the index, with the remaining half placed into an income account that pays a quarterly coupon of 8.8% pa. However, if the index falls below a predetermined barrier of 90%, 85%, and 80%, respectively, an additional amount (20%, 20%, 10%) will be allocated to the income account.

Image: Zodar/Adobe Stock.