Calyon recently launched in Hong Kong a short-dated principal-protected retail note with an embedded Asian call option linked to the Nikkei 225 index, to capitalize on investors' favorable view of Japanese equities. "The general belief is that the Japanese market will continue to rise in the coming year," said Dickson Cheung, head of equity derivatives sales and marketing in Hong Kong. "We see Japanese assets as being undervalued compared to other Asian countries."
The one-year structure contains an Asian option with an at-the-money strike price. It references the average value of the underlying per quarter and is offered in U.S. and Australian dollars. Cheung continued that investors in the region are beginning to shift back to principal-protected trades rather than pure yield-enhancement products given increasing uncertainty about global markets and interest rates.
