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Derivatives

Korean Retail May Shift Away From Equity

Derivative marketers for Korea expect to see the current fad for retail equity-linked structures shift toward other asset classes in the coming months.

Derivative marketers for Korea expect to see the current fad for retail equity-linked structures shift toward other asset classes in the coming months. "I expect commodity-linked structures to become much more popular," said S.K. Hong, director at ABN AMRO in Hong Kong. Marketers said with the domestic equity market expected to slow down this year after a strong run last year, domestic securities houses are starting to look at alternative offerings to worst-of baskets on single stocks for their retail base.

Products referenced to fixed income, commodities and combinations of asset classes are beginning to draw inquiries, noted a marketer in Seoul. Hong anticipates deals linked to oil or the Goldman Sachs Commodity Index should take off within six months. "Clients are looking for high coupons, which these may provide," he added.

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