This week’s in brief focuses on how major markets have fared while we walk into the second half of the year.
In the US, the registered note space is on pace to post another yearly record high despite a downturn in June as the issue amount hit US$67.1 billion in H1 2024.
In June, a total of US$9.2 billion traded notional was collected from 3,161 structured notes registered with the US Securities and Exchange Commission (SEC)
In June, a total of US$9.2 billion traded notional was collected from 3,161 structured notes registered with the US Securities and Exchange Commission (SEC), which was a 19.4% decline from May, hitting the lowest level this year, according to SRP data.
J.P. Morgan posted a net income increase of 25% YoY for the second quarter of the year. The US bank generated US$4.6 billion from 2,093 SEC-registered structured notes issuances from April to June, which was down 11.6% quarter-on-quarter, but up 7.2% year-on-year (YoY).
The largest issuer also deployed the S&P GSCI Excess Return Index which is back to the market for the first time this year.
Meanwhile, Goldman Sachs reported strong EQD earnings in its global banking & markets (GBM) unit for Q2 2024, although its US structured notes sales fell 5%, in line with the overall market downturn.
In Latin America, the Schroder Special Situations Fund (SSF) Structured Income has posted a discrete net return of 8.8% on its first-year anniversary. The first autocall fund launched by Schroders since the 2008 financial crisis was also sold in the UK and Israel with US$10.5m assets under management (AuM) as of June-end.
The fund is a ‘more liquid alternative’ compared with call overwriting strategies, said Csaba Koppany, head of risk managed investments (RMI) solutions management at Schroders.
In Europe, Leonteq has reported a net profit of CHF15.7m (US$17.7m) for the first half of 2024 despite continued challenging market conditions. The CEO of Swiss structured products provider said he would step down once a successor is appointed.
French fintech platform Aydo is assessing its structured products activity during the first half of the year with insights into the new structures added to the product mix as investors take advantage of the current pricing environment.
With correlation falling and dispersion at all time high relative to volatility, the path ahead for dispersion strategies remains a subject of debate in the market, according to BNP Paribas.
The French bank stated that the traditional hedge fund volatility trade has become one of the biggest options strategies in the market and with further dispersion triggered during the earning season, new opportunities are created for long/short strategies.
In private banking, Julius Baer has appointed Stefan Bollinger, currently a partner at Goldman Sachs, as CEO, effective no later than 1 February 2025.
SRP reviewed some of the best-performing products across European markets in the first half of the year.
Autocalls continued to deliver, often maturing early on their first valuation date, while Belfius’ participation note on the Euronext Banks also registered an optimal performance.
The past week also saw a series of SRP market reviews for various markets come out for the second quarter of the year.
In Poland, products linked to equity underlyings claimed more than 90% of the market by sales volume in the second quarter of 2024. An estimated PLN1.1 billion (US$279m) was collected from 44 structured products that struck on the Polish primary market in Q2 2024, according to SRP data.
In Finland, an estimated €333 million was collected from 104 products that struck in Q2 2024. Sales volumes decreased by 17% compared to the previous quarter and decreased by 35% year-on-year (YoY).
For the quarter, the top 10 best-selling products generated €115 million compared to €277 million for the prior-year quarter.
Meanwhile, an estimated SEK1.69 billion (US$157m) was collected from 121 products that struck on the Swedish market from April to June. The sales volumes decreased by 26% compared to Q1 2024 and fell by three percent from the prior year quarter when SEK1.74 billion was gathered from 108 products.
Amidst the current high-interest rate environment, yield enhancement products surprisingly continued to shine in the first half of the year in major Asia Pacific markets, according to our Spotlight on Apac H1 2024.
While yield enhancement products may face a headwind as high interest rates tend to favour traditional fixed income products, sales remained strong during the first half of 2024.
In June, both the number of issuances and estimated sales volume of structured deposits have risen in the Chinese market. Commodity-linked products gain momentum.
SRP database registered 2,418 structured deposits issued in the country in June, soaring around 49% from May’s issuance which saw 1,620 products, according to China Market Review, June 2024.
As follow up of the SRP APAC Awards 2024, Crédit Agricole Corporate Investment Bank (Cacib) spoke to SRP about its solution to help Korean securities houses cope with risk management as the autocallable market was hit by the underperformance of the Hang Seng China Enterprises Index (HSCEI) in 2023.
On the digital assets side, the US Securities & exchange Commission (SEC) has signed off several spot Ethereum exchange-traded funds (ETFs), allowing them to begin trading from 23 July, after weeks of registration statement revisions.
CSOP has listed Asia’s first bitcoin futures inverse product in Hong Kong SAR on 23 July. The CSOP Bitcoin Futures Daily (-1x) Inverse Product (7376.HK) aims to track, before fees and expenses, the one-time inverse daily performance of the S&P Bitcoin Futures Index.
Image: Mirage Studio/Adobe Stock.
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