A handful of Asia Pacific equity-linked investment products were issued in the U.S. last week by firms including JPMorgan and Lehman Brothers. Rivals said the structures were noteworthy because U.S. retail investors are traditionally home-focused and while some structures have included Japanese equity before, interest in other Asia Pacific markets has only just started to take root.
JPMorgan is marketing a basket of Asian equity indices, which includes exposure to Korea, Singapore and Taiwan, with two-times leverage up to a maximum return of 24.5%. Investors' capital is protected against a drop off in the basket's value of up to 15%. Officials at JPMorgan declined comment. Lehman's offering combines the Australian Standard & Poor's ASX 200 index with the FTSE 100, Euro STOXX 50, S&P 500 and Nikkei 225 in a four-year note with a payoff between 150-160% of initial investment and protection against a 20% fall in the basket's value. David Bizer, head of equity derivative sales at Lehman in New York, did not comment by press time.
"A lot of strategists are bullish on Asia ex-Japan right now, and people are picking up on that," explained one structured salesman in New York. He noted investors are also getting brave and expanding global investments after buying into Nikkei-linked structures last year and seeing good returns.
