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Equity rally saves structured products from pandemic ruin
The Asset reveals the winners of The Asset Triple A Investment Awards 2021
The Asset 2 Sep 2021

The strong rally that equity markets experienced in the second quarter of 2020, along with persistent low interest rates and massive market liquidity, provided timely support to the structured products or investment solutions market, which suffered a major hit in the early days of the pandemic.

In Q1 2020, the outbreak of Covid-19 resulted in markets plummeting 34% in just 24 trading days, including one of the fastest bear-market drops ever, bottoming on March 23 2020. But since then, the markets have recovered very well with the S&P 500 up by 76% to close at 3,889.14 a year later. The rally has not stopped with the S&P 500 rising to 4,522.68 as of August 31 2021.

This bull market has saved structured products manufacturers and investors who now seem to have forgotten all the nerve-wracking days that they may have had when the markets crashed in Q1 and are now reaping the benefits of the ongoing rally.

Because of this, most of these equity investment solutions or structured products became very popular and successful during the awards period for The Asset Triple A Investment Awards 2021 which covered the period from April 2020 to March 31 2021. This is the investment solutions category of The Asset Triple A Private Capital Awards for Private Banks, Wealth & Investment Bank Advisers, Solutions and Index Providers 2021. 

Autocallables and warrants, among others, were the more popular products among structured products investors. Relative to equity products, credit structured products were not in demand because of the low returns arising from the low interest rates.

Demand for FX and commodity structured products saw some interest but were generally flattish during the period.

“It’s mostly on the equity side where all the excitement is. Credit is pretty quiet because the interest rates are boring especially in Asia, and when the US markets are outperforming, no one’s looking at Emerging Asia credit. So in that case, there’s not much excitement, a lot of the resources are directed to equity,” according to an analyst.

In terms of client segment, the appetite for investment solutions is much more active in North Asia, particularly in Hong Kong, Taiwan, South Korea, and Japan where the investors are willing to take on more risk for greater capital gains. In Southeast Asia, investors are more conservative, preferring products with more stable and recurring income.

The biggest winner was Credit Suisse whose rather conservative philosophy and hedging strategies differentiated it from Société Générale, which recorded a €1.26 billion (US$1.4 billion) loss in Q2 2020, mainly attributed to the revenue losses of its equity trading division amid the coronavirus outbreak.

But it’s not only its conservatism that made Credit Suisse the winner of The Asset Triple A Best Bank for Investment Solutions 2021, Asia award. During the pandemic, the bank kept a steady hand on its flow business which posted strong growth, came up with excellent structured products solutions, and provided reliable post-sale service which its customers appreciated very much during the pandemic.

Credit Suisse also wins The Asset Triple A Best Bank for Investment Solutions, Equity - Asia  as a testament to its strong equity derivatives franchise.

Despite its losses, Société Générale did well in other asset classes in Asia, winning The Asset Triple A Best Bank for Investment Solutions, Multi-Asset - Asia,  The Asset Triple A Best Bank for Investment Solutions, Rates - Asia, and The Asset Triple A Best Bank Investment Solutions, Credit - Asia awards.

BNP Paribas Wealth Management (BNPP WM) wins The Asset Triple A Best Bank for Investment Solutions, FX - Asia and The Asset Triple A Best Bank for Investment Solutions, Commodities - Asia.    

To see a complete list of winners, please click here.

For more details about the awards, please click here.

For more information about receiving the awards, please contact [email protected].

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