Bear Stearns is finalizing a retail equity-linked product in Hong Kong offering a monthly coupon which the firms says is a first for the market. "This is a new type of product containing a monthly payout structure which also has the ability to generate income in either up or down markets," said Joseph Chan, managing director in Hong Kong.
Dubbed Swing, the note is linked to three Hong Kong-stocks including HSBC and offers three initial fixed monthly coupons, followed by potential monthly coupons if all three stocks move up or down by 2% over the month. "A lot of clients are still bullish on Hong Kong in the long-term but in the intermediary period it might be difficult to say where the market will move. This product allows clients to capitalize on that volatility," said Chan. Additionally, there is an early redemption feature valued quarterly whereby the structure may be auto-called if all three stocks are up 5% for the quarter. If at the two-year maturity the five-day average share price for the worst performing share is below the strike price, shares in that stock will be delivered.
The note is Bear Stearns' third in Hong Kong from its recently-established retail program, set up by Chan and Edward Ho, senior managing director in Hong Kong, who both joined from Merrill Lynch (DW, 3/12).
