In this week’s news we reported on single-issuer platforms becoming hubs for internal users, the first CLNs in Taiwan, the potential impact of a maturing government bond on Belgian volumes, and more.
Elias Milan, global head of exotic products e-business at Société Générale, told SRP that single-issuer platforms are increasingly becoming cross-asset hubs pushing the market to mainstream.
Our single dealer platform is not just a platform targeted at our clients, it has become a hub for our internal users as well - Elias Milan, Société Générale
“Our single dealer platform is not just a platform targeted at our clients, it has become a hub for our internal users as well,” Milan said.
BNP Paribas – which was voted ‘Best House, Taiwan’ at the SRP Asia Pacific Awards 2024 in Singapore – has debuted the first batch of credit-linked notes (CLNs) in the country, making it the first and only issuer in the Taiwanese market to do so, Charles-Edouard Garnier, managing director, head of equity derivatives sales, Asia ex-Japan at BNP Paribas, said in an interview with SRP.
Previously, the French bank had been expanding its structured notes activities in Taiwan by diversifying into fixed-income products, which took up around 27% market share in 2023.
Insights
Three market reviews were published during the week, including one for the UK, where products featuring the autocall payoff increased their market share to 73% – up 11 percentage points year-on-year – while in China FX rates, led by XAU/USD, EUR/USD, and AUD/USD, continued to attract investors in structured deposits.
In Switzerland, an estimated CHF7.9 billion (US$ 8.7 billion) was collected from 23,825 products that struck during May 2024. Sales volumes were up 74% compared to May last year but fell by nine percent month-on-month, according to SRP data.
The drop in volumes was confirmed by the latest figures from the SIX Swiss Exchange, where turnover for structured products was down 19% despite the number of tradeable products increasing to 63,053. Of these, 49,585 or 78.6% are leverage products; 11,326 are yield enhancement products; 1,719 are participation products; 318 are capital protection products; and 105 are products linked to reference entities.
Our asset class offers the perfect alternative to a direct investment in the underlying shares or bonds, especially as retail investors' investment appetite will remain high - Filip Gils, Belsipa
Meanwhile, in Belgium, primary market sales topped €1 billion in Q1 2024 and the future is even brighter with a highly subscribed government bond issued in 2023, which attracted an issuance volume of almost €22 billion, is due to mature soon, making it worth for investors to ‘rethink’, the structured products asset class, according to Filip Gils, vice-chair of the Belgian structured investment products association (Belsipa).
‘Today's markets provide an almost ideal environment for structured products to play out their benefits […] our asset class offers the perfect alternative to a direct investment in the underlying shares or bonds, especially as retail investors' investment appetite will remain high,’ Gils said.
Analysis
There were analyses from SRP’s own Nikolay Nikolov and FVC’s Tim Mortimer. The former showed that structured products linked to single stock indices and interest rates have registered the biggest growth in recent years in France. As of end-March 2024, they had increased by 196% and 155%, respectively, compared to January 2023.
Mortimer focused in the US market – in particular on products covered by the StructrPro tool.
Conclusion: nearly 90% of the 53,000 maturing products made a profit, delivering 6.6% pa on average. The average dollar payoff from a US$100 investment is US$111.56, compared to the underlyings themselves with an average of USD109.68, both over an average term and time in the market of 1.6- years.
Since January 2024, the 11 ETFs on Bitcoin have gathered around US$60 billion in assets under management, according to Guillaume Chatain, the newly appointed head of sales at SG-FORGE, Société Générale subsidiary dedicated to crypto assets.
“This is a clear illustration of the appetite for this new asset class by retail investors and increasingly by institutional investors as well,” said Chatain in an interview with SRP.
More crypto news came from the likes of STOXX, which licensed the STOXX Digital Asset Blue Chip Index to Maerki Baumann, a Zurich-based private bank. The index will serve as an underlying for the ARCHIP Crypto Certificate and Crypto Focus Module that are actively managed by the private bank.
The Australian Securities Exchange (ASX) listed the VanEck Bitcoin ETF on 20 June, making it the first Bitcoin ETF present in the country’s largest stock market while Cboe plans to list cash-settled index options on the FTSE Bitcoin Index and FTSE Ethereum Index, respectively, subject to regulatory approvals, to meet growing investor demand for exchange-traded derivatives.
An annuity industry survey, conducted by Goldman Sachs Asset Management, claimed that investment products purposefully designed to provide downside protection while also allowing for upside market participation will be prioritized on investors' annuity lineup in the next 12 months.
Nearly 50% of respondents believe that custom indices focused on artificial intelligence will be popular in 2024.
Image: Jon Anders Wiken/Adobe Stock.
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