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Derivatives

Korean Retail Mart Shifts To I-Rate Products

Domestic houses in Korea have recently started issuing interest rate products to retail clients in a shift away from a market flooded with equity-linked structures.

Domestic houses in Korea have recently started issuing interest rate products to retail clients in a shift away from a market flooded with equity-linked structures. "The stock market has soared a lot and some investors feel there might not be another dramatic increase," explained a marketer at Barclays Capital.

Local players such as Shinhan Bank have distributed products including range accruals which are structured or hedged via foreign houses. Officials in Shinhan's structured products department declined comment. While diversifying away from equity-linked instruments, which have been popular for the past two years, retail investors are also in search of returns. "With interest rates remaining low, retail clients are looking for new ways to enhance yield," said a fixed income head at a European house. A senior official at Woori Bank said the firm is also considering offering retail interest rate products but declined to elaborate.

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