The sharp correction in the Asian equity markets last week is expected to take its toll on sales of participatory notes referencing local stocks. Bankers think the indices fall will probably dampen demand, even though it also spiked volatility, potentially making the notes more valuable.
One senior Hong Kong equity official said it is too early to say whether this is a permanent downturn. He was, however, largely positive as toward the end of the week Asian indices showed signs of stabilization.
On Feb. 27 the Shanghai and Shenzen Composite indexes suffered their sharpest fall in a decade, both losing almost 9% on rumors of the Chinese government introducing restrictions on investing with borrowed money, sparking sharp declines in the rest of Asia and beyond.