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Asset Management / Awards / Wealth Management
Private Capital Awards 2022: The best and worst of times for structured products
Presenting the winners of the Best Bank for Investment Solutions Awards
The Asset 22 Sep 2022

For structured products, 2021-2022 was probably the most interesting period since the global financial crisis amid the dramatic changes that hit the market in the relatively short span of time.

In 2021, despite the pandemic, about 91% of all maturing products generated positive returns for investors following their worst showing in the previous year when only 70% produced positive returns, according to a five-year performance review by StructuredProductReview.com.

Last year, about 99% of structured products were invested in equity-linked, non-capital protected products. Investor demand for all other types of structured products was non-existent.

These products, basically autocallable structures (autocalls) which pay a high coupon when the underlying equity index or single stock passes a certain level, saw huge gains as markets were recovering from the pandemic lows of 2020.

Investors were raking in profits from autocalls so it was just a matter of putting in more and more money into the same types of products. There was no interest at all in coming up with innovative structures.

But things changed dramatically for the structured products market in early 2022 when the combined impact of the Ukraine crisis and the uncertainty over rising interest rates, along with higher inflation, hit the market.

Global stock markets recovered quickly. However, structures are no longer being autocalled and investors are no longer making money on such products. It marked the end of non-capital-protected equity-linked products, at least for the time being.

Rising interest rates were another crucial factor.  In 2021, when interest rates were almost zero, there was no room for structurers to manufacture zero-coupon bonds for the most conservative investors.

But this changed completely when the US Federal Reserve, for the first time since 2018, raised its federal funds benchmark rate by 25 basis points to a range of 0.25% to 0.50% in March 2022. The Fed has also signalled that rates may rise to 4% by December and remain high through 2023.

Rising interest rates resulted in a strong demand for rates products, particularly capital-protected rates products, among investors. This means it’s now possible to have 18-month or one-year capital-protected products at meaningful upside linked to assets classes other than equity.

Among the key trends for structurers are:

  • The continuing interest rate hikes combined with the bear market in equities have spurred investor demand for rates products; and
  • It’s now possible to manufacture capital-protected products, particularly those linked to interest rates.

Although it’s still early days, there may be growing interest from investors for interest rate-linked, credit-linked, and commodity-linked structures as well as inflation-themed products.

It is in this context that we are announcing the winners of the Best Bank for Investment Solutions Awards as part of The Asset Triple A Private Capital Awards for Private Banks, Wealth & Investment Bank Advisers, Solutions and Index Providers 2022.

Credit Suisse

Credit Suisse stood head and shoulders above the competition by offering investment solutions that are responsive to changing investment themes and client demand in rates, equity and credit as the bull market turned into a bear.

In rates, Credit Suisse offered floating rate solutions that allow investors to ride the trend of rising interest rates with a smooth transition from Libor to Sofr (secured overnight financing rate).    

In equities, Credit Suisse came up with delta hedging solutions that provide clients with tail-hedging exposure.

In credit, Credit Suisse offered private credit solutions in alternatives which provide illiquidity premium that can absorb adverse market effects on returns, while providing diversification benefit to potentially increase the Sharpe ratio of portfolios.

Credit Suisse also offered a range of principal protected notes with various underlying assets in commodity, mutual funds or multi-asset indices.

Credit Suisse is recognized as:

  • Best Bank for Investment Solutions, Asia
  • Best Bank for Investment Solutions, Rates, Asia
  • Best Bank for Investment Solutions, Equity, Asia
  • Best Bank for Investment Solutions, Credit, Asia

BNP Paribas Wealth Management

BNP Paribas Wealth Management has sought to meet the needs of its sophisticated FX clients by providing customized, institutional-type, solutions-driven coverage to tap fast-moving trading opportunities.

BNP Paribas also offered solutions using commodities for their excellent hedging properties which are particularly useful as a volatility hedge during periods of high volatility and market uncertainty.

BNP Paribas is recognized as:

  • Best Bank for Investment Solutions, FX, Asia
  • Best Bank for Investment Solutions, Commodities, Asia

Société Générale

Société Générale (Socgen) has successfully rebalanced its business mix in structured products by offering innovative and customized cross-border financing solutions for its institutional client base, particularly insurance companies. In Hong Kong, Socgen also cemented its position as the leading issuer by capitalizing on an explosion in demand for callable bull and bear contracts (CBBCs).

Socgen is recognized as:

  • Best Bank for Investment Solutions, Equity, Hong Kong

CTBC Bank

CTBC Bank maintained its leading position in Taiwan’s structured products market by becoming the first bank to issue onshore foreign currency structured notes, the first bank to offer compounded US dollar Sofr Loan + Hedging interest rate swap in Asia, and  the largest onshore USD/TWD par forward in the domestic market in 2021.

CTBC Bank is recognized as:

  • Best Bank for Investment Solutions, Taiwan
  • Best Bank for Investment Solutions, Rates, Taiwan
  • Best Bank for Investment Solutions, FX, Taiwan
  • Best Bank for Investment Solutions, Commodities, Taiwan

CIMB Group

CIMB Group has remained the dominant player in the structured products market in Malaysia, generating steady volumes of business despite the pandemic. It continued to offer strong solutions, in particular pushing for gold covered calls, allowing investors to profit off climbing gold prices, and Dual Currency Investment (DCI), allowing them to benefit from higher yields.

CIMB Group is recognized as:

  • Best Bank for Investment Solutions, Malaysia
  • Best Bank for Investment Solutions, FX, Malaysia
  • Best Bank for Investment Solutions, Commodities, Malaysia
  • Best Bank for Investment Solutions, Credit, Malaysia
  • Best Bank for Investment Solutions, Rates, Malaysia

CIMB Thai

CIMB Thai has remained the dominant player in Thailand for structured products by providing  the most complete suite covering rates, FX, credit, equity, commodities and funds denominated in Thai baht and other foreign currencies. It was the largest issuer of structured debentured in Thailand in 2020 amid the pandemic. CIMB Thai has also demonstrated its ability to adapt to changing regulatory frameworks and market cycles.

CIMB Thai is recognized as:

  • Best Bank for Investment Solutions, Thailand
  • Best Bank for Investment Solutions, Equity, Thailand
  • Best Bank for Investment Solutions, Rates, Thailand
  • Best Bank for Investment Solutions, Multi-asset, Thailand
  • Best Bank for Investment Solutions, FX, Thailand

CIMB Niaga

CIMB Niaga has helped its clients handle the transition from Libor to Sofr smoothly by making and dealing new interest rate derivatives products referencing to Sofr and Term Soft, mainly cross-currency swaps and interest rates swaps. CIMB Niaga successfully issued new structured deposits referencing to term Sofr in 2022, making it the first structured product ever offered in Indonesia that is referencing to term Sofr.

CIMB Niaga is recognized as:

  • Best Bank for Investment Solutions, Rates, Indonesia
  • Best Bank for Investment Solutions, FX, Indonesia

Yuanta Futures

Yuanta Futures has remained the leader in terms of trading volume in futures and options trading on the Taiwan Futures Exchange and foreign futures.  Last year, the firm expanded its products suite by adding silver CFDs, foreign index CFDs, and US Stock CFDs. During the first five months of 2022, the trading volume of its US stock CFDs more than doubled.

Yuanta Futures is recognized as:

  • Best Bank for Investment Solutions, Listed Derivatives, Taiwan

Editors’ Triple Star

Sinopac Securities has developed the unique Equity Swap Electronic Trading platform which improves transaction speed significantly and can provide high leverage to clients. Its API (application programming interface) has enabled clients to automate trading strategies and monitor the portfolio in real time. Though its client base has been stable, its trading volumes have been picking up during the awards period.

Please click here for the full list of winners. 

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