Investors in Asian equity have started moving away from more exotic structured products to more simple flow derivatives as positive market sentiment in the region increases. "Clients are reverting back to flow products," said Jasmine Toh, equity derivative marketer at Morgan Stanley in Hong Kong. She noted on the retail side, for instance, local banks have been pushing smaller-size multiple transactions rather than one-off larger structured deals. Officials said that clients are steering away from other markets such as the U.S. and longer-dated exotic structures as they anticipate the run-up in Asian stocks to continue.
"The market sentiment is very bullish", said Dickson Cheung, managing director and Asia ex-Japan head of equity derivatives marketing and sales at Calyon in Hong Kong. "There's been an increase in vanilla products such as warrants, range accruals and simple OTC options," he added. This year he anticipates firms to expand capacity on the trading side to facilitate the pick-up in derivative volumes. "In recent years the focus has been on structuring and sales but now I see more demand for traders," he added.
