Macquarie Equities (Asia) has kicked off its marketing effort for a share accumulating equity-linked note in Hong Kong. "It's a very suitable product for the current market environment as investors are becoming cautiously optimistic," said Matthew Long, head of equity derivatives sales in Hong Kong. The note, dubbed KODA, for Knock-out Discount Accumulation, is referenced to domestic or U.S. shares and allows clients to buy shares below their spot price.
In an example trade, in an HKD11.24 million (USD1.5 million) investment linked to HSBC Holdings, a customer acquires 500 shares of stock at 93.5% of the spot price every trading day for the life of the instrument. If the underlying shares rise above the designated knockout price, in this case 106% of the initial spot value, the ELN will redeem early and the investor may receive either cash or shares. The notes typically have a one or two year maturity. KODA is primarily targeted at private banking clients.
Long continued that the firm has offered similar products in Japan, via its joint venture with Mizuho Securities.
