The equity-linked note market in Taiwan is seeing a major shift to short-term bullish products on local underlying, following a recent pickup in domestic stocks. An equity derivatives head in Hong Kong said clients in Taiwan are moving away from exotic longer-dated capital guaranteed structures on foreign underlying to shorter-term auto-callable structures that are not principle protected on local underlying.
"Customers want more upside," said the equity head, noting that the capital guaranteed market has shrunk dramatically, as it has in recent years in other regional markets such as Hong Kong. Such products structured by international houses are distributed via trusts to both institutional investors and retail clients, and due to local regulations are denominated in U.S. dollars.
