Macquarie Bank has shifted its equity structuring focus in Hong Kong from more bullish products to those emphasizing the range-bound market in recent weeks. "We've had an enormous amount of requests for these types of products," said Matthew Long, head of equity derivative sales at Macquarie in Hong Kong, explaining that given the domestic market's lack of direction in the last month or so, such instruments as callable range accrual notes have replaced more upside-geared features including worst-of structures.
In a typical accumulating product, a client accrues coupon payments for every day the underlying price remains within a 95% to 105% range of the initial spot level. At maturity if the stock price is below the 95% threshold, the client receives shares. Such structures can also contain a callable knockout feature on the upside. Typical maturity is one year. "As markets have become flatter, the focus came back to products that perform better in this type of environment," added Long.
