In the past year, as aggressive interest rate hikes and geopolitical uncertainties pushed the stock market into a downtrend, investors piled into full principal-protected products offering fixed rate or floating rate coupons. The flight to quality saw many investors favouring credit products in view of the bearish equity markets.
But this trend has reversed starting in Q4 2023 with the recovery of the equity markets. Stocks related to technology and artificial intelligence (AI), led by the so-called Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) pushed the index upwards.
This in turn has bolstered the demand for equity structured products as investors took on a risk-on approach versus the flight to quality in previous years. The Magnificent Seven accounted for half of the S&P 500's total gains in 2023, according to a report from Morgan Stanley.
Also last year, principal-protected products accounted for one-third of the structured products business, based on submissions of leading structured product banks in Asia, with the remainder accounted for by accumulators, decumulators, covered call strategy products, and other risk enhancement products.
Apart from accumulators and decumulators, equity-linked notes (ELNs) also generated substantial return during the AI-driven momentum in US equities. The underlying assets for the ELNs, accumulators and decumulators were mostly the Magnificent Seven stocks.
Another key trend is that the leading structured product providers, particularly BNP Paribas Wealth Management, offered their investors new structured products with diversification play within and across asset classes.
With equities continuing to perform well in the first half of 2024 as well as the prospects for interest rate cuts that will impact fixed income, diversification is a key trend for investors in order for them to generate alpha.
Apart from equities, credit, rates, and commodity structured products, as well as multi-asset class portfolios, also offer potential for alpha and good opportunities for investors.
Another key trend is geographical diversification, with well-performing markets, particularly Japan and India, providing new opportunities for all types of asset classes in structured products.
Both Nikkei and the Nifty indices reached record highs in recent weeks, reflecting the bullish sentiment and strong fundamentals for these markets.
It is in this context that we at The Asset announce the winners of the Investment Solutions Awards as part of the Triple A Private Capital Awards for Private Banks, Wealth & Investment Bank Advisers, Solutions and Index Providers 2024.
BNP Paribas Wealth Management wins Best Bank for Investments Solutions, Asia, for all asset classes including:
- Best Bank for Investment Solutions, Asia
- Best Bank for Investment Solutions, Equity – Asia
- Best Bank for Investment Solutions, Credit – Asia
- Best Bank for Investment Solutions, FX – Asia
- Best Bank for Investment Solutions, Commodities – Asia
The firm’s structured products business had a solid performance, posting a 20% year-on-year (yoy) growth in 2023 despite the tough market conditions. It posted a 50% yoy growth in Q1 2024.
This strong performance in both bull and bear markets is based on its extremely selective and conservative ideas throughout 2023 that made better use of higher rates for better capital preservation.
BNP Paribas Wealth Management also produced products that were responsive to investor requirements. Recognized as “Best Structured Investment and Financing Solutions, Asia”, these products are:
- Best of Profiles Note
- Bullish Sharkfin Note linked to TLT UQ
- Bullish Sharkfin Note Linked to NIFTY
CIMB Malaysia wins as Best Bank for Investments Solutions for almost all asset classes in Malaysia, namely:
- 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, Rates – Malaysia
- Best Bank for Investment Solutions, Credit – Malaysia
Despite the competitive landscape, CIMB remains the dominant structured products provider in Malaysia, leveraging its in-house expertise to warehouse majority of the risks arising from these structures as well as exploring investment opportunities/solutions for yield enhancement in various asset classes to optimize and diversify investors’ portfolios.
Maybank Investment Bank is Best Bank for Investments Solutions, Equity – Malaysia. In 2023, Maybank designed capital protected products that were responsive to client demand and offered investors the opportunity to participate in the upside / downside of the market while maintaining a degree of capital protection.
PT Bank CIMB Niaga Tbk grabs the Best Bank for Investment Solutions, Rates – Indonesia and Best Bank for Investment Solutions, FX – Indonesia awards.
CIMB Niaga Structured Product continues to launch sustainable products that not only drive financial returns but also enhance market competitiveness.
CIMB Thai wins as Best Bank for Investment Solutions – Thailand, as well as Best Bank for Investment Solutions, Equity – Thailand, and Best Bank for Investment Solutions, Rates – Thailand.
It is recognized for its track record as an innovative investment solutions provider, offering the most complete suite covering multi-asset structured investment products including rates, FX, credit, equity, and commodities.
Siam Commercial Bank (SCB) wins as Best Bank for Investment Solutions, FX – Thailand. During the review period, SCB’s FX structured products allowed the bank to capture more US dollar investment wallet from investors and achieve a prominent position in the SEC Structured Debenture league table for FX linked products, having booked an aggregate notional amount of 5.66 billion baht (US$156.87 million).
CTBC is Best Bank for Investment Solutions – Taiwan, as well as Best Bank for Investment Solutions, Rates – Taiwan, Best Bank for Investment Solutions, Commodities – Taiwan, and Best Bank for Investment Solutions, FX – Taiwan.
In 2023, CTBC achieved a breakthrough in the onshore ELN market, pioneering the bank industry to issue the first onshore equity-linked notes. With the strong product structuring and risk management capability, CTBC claims to be the first bank offering term Sofr collar and sustainability-linked derivatives (SLD) hedging solutions among Taiwanese peers in 2023.
Cathay United Bank wins as Best Bank for Investment Solutions, Equity – Taiwan. Its equity-linked investment (ELI) generated strong investor demand, recording last year a total of 1,250 transactions amounting to NT$26.5 billion (US$813 million) and a revenue of NT$600 million.
BBVA is recognized as Best Bank for Investment Solutions, Equity – Asia, Rising Star. A newcomer to the structured products business in Asia, BBVA has been rolling out its capabilities to distributors, particularly private banks in Hong Kong, Singapore and Taiwan.
For the full list of winners, please click here.
The awards dinner will be held on September 23 2024. Please contact [email protected] for details.
