No Signal for Revival

Korea Investment & Securities’ TRUE ELS 7607 Step-down with a goal of three billion won (US$2.6 million) was cancelled on August 12 with the final value standing at five million won (US$4.350).
Korea Investment & Securities’ TRUE ELS 7607 Step-down with a goal of three billion won (US$2.6 million) was cancelled on August 12 with the final value standing at five million won (US$4.350).

 

According to the Korea Securities Depository, the number of ELS issue cancellations in the South Korean market edged down compared to the preceding month to 122 last month but the ratio of cancellation, 9.6%, reached the highest level since January this year due to a decrease in total issue value. Last month, the total issue value declined by approximately 670 billion won to hit this year’s low of 2.5703 trillion won.

“This has to do with Brexit and the HSCEI that plummeted last year,” Kyobo Securities explained, adding, “The ratio of cancellation was particularly high in the case of ELS based on foreign stock market indices.” These days, even those products based on HSI instead HSCEI and having lower knock-in barriers or no knock-in barrier at all are failing to appeal to investors.

For example, Korea Investment & Securities’ TRUE ELS 7607 Step-down with a goal of three billion won (US$2.6 million) was cancelled on August 12 with the final value standing at five million won (US$4.350). Based on HSI, DAX and S&P 500, this product with a maturity of three years and early redemption conditions had a knock-in barrier of 50% for enhanced stability.

Likewise, Mirae Asset Daewoo’s ELS 15836, which had no downside knock-in condition at all, attracted merely 10 million won (US$8,695) until August 11 whereas its goal was three billion won (US$2.60 million). SK Securities’ ELS 2031, which had a target value of two billion won, ended up with zero as is the case with KB Investment & Securities’ ELS 1236 based on HSI, KOSPI 200 and S&P 500 and available from August 10 to 12. KB’s ELS 1237, which was available during the same period, was cancelled after meeting only 0.23% of its target, too.

 

 

 

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