Structured financial solutions designed to address specific risk-return objectives
Structured Product
Structured Products Advantages
Structured Products are hybrid investments made up of a bond and an option to offer the potential for higher returns compared to standard deposits
Tailor-made solutions for your specific needs
Product structures are designed to meet with client's specific needs and financial goals.
Tailor-made solutions for your specific needs
Product structures are designed to meet with client's specific needs and financial goals.
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Well designed products that articulate market views
Selected structured products designed by KGI Asia's expertise to enhance your investment return.
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Higher yields based on market movements
By taking advantage of market volatility, investing in structured products has the opportunity to purchase the underlying at a strike price that is lower than spot level to obtain higher returns.
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Equity Linked Note (ELN)
Equity-linked note (ELN) is one of the most popular structured products in the market for investors looking for yield enhancement, which can be further divided into "bullish", "bearish" and "hybrid" notes.
Category
Equity-linked
Common Assets
Performance of an individual stock, a basket of stocks or a stock index
Related Products
Equity-linked instruments, equity high-yield note, equity-linked fixed coupon note, equity-linked range accrual note.
Precautions
Investors are subject to the risks of stock price fluctuations, the effects of dividends and corporate actions. When the note expires, they may receive the underlying stock or receive the cash amount that is less than the original investment amount. It may lose some or all of the principal, resulting in loss of partial.
Equity-linked note is not listed or traded on any market managed by the Hong Kong Exchanges and Clearing Limited or any other stock exchanges. Although some issuers offer secondary market trading, investors may need to bear the loss on the spread if selling before the maturity date.
Investors would bear the credit risk of the issuer or the guarantor. If the issuer or the guarantor is bankrupted or closed down, the investment principal may be suffered, and it may lose part of or all of the principal.
Main Risks
There are many types and forms of structured products. Investors should beware of the following investment risks, including but not limited to:
Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause loss
Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors might able to unwind transactions at the bid price that is determined by the issuer and the transparency is low.
EQUITY LINKED INVESTMENT (ELI)
An equity-linked investment (ELI) is generally a short to medium-term investment product. In addition to this potential interest, the payoff would be determined by the performance of reference stock(s). Generally, ELI could be one of the investment tools to enhance returns when investors hold relatively stable or moderately bullish views on reference stock(s).
Category
Equity-linked
Common Assets
Performance of an individual stock or a basket of stocks
Related Products
Callable Equity Linked Investments, Equity Linked Investments with Potential Bonus Enhancement
Precautions
When an investor purchases an ELI, he is indirectly writing an option on the underlying shares. If the market moves as the investor expected, he earns a fixed return from his investment which is derived mainly from the premium received on writing the option. If the market moves against the investor's view, he may lose some or all of his investment or receive shares worth less than the initial investment.
Main Risks
There are many types and forms of structured products. Investors should beware of the following investment risks, including but not limited to:
Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause loss
Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors might able to unwind transactions at the bid price that is determined by the issuer and the transparency is low.
Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause loss
Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors might able to unwind transactions at the bid price that is determined by the issuer and the transparency is low.
Credit-linked
The structure of Credit-linked product is composed of bonds position and its related credit derivatives. Credit derivatives include credit default swaps, total return swaps, and credit spread options:
Credit-linked product = bonds + credit derivatives
Credit-linked note is a contract that transfers or avoids credit risk. The issuer pays additional premium to the investor of the note to transfer credit risk. When the credit rating of the relevant asset changes, the investor will be responsible for the losses related to the change of credit, when a credit default event occurs, investors may have to bear some or all of the principal losses.
Credit-linked product = bonds + credit derivatives
Credit-linked note is a contract that transfers or avoids credit risk. The issuer pays additional premium to the investor of the note to transfer credit risk. When the credit rating of the relevant asset changes, the investor will be responsible for the losses related to the change of credit, when a credit default event occurs, investors may have to bear some or all of the principal losses.
Category
Credit-linked
Common Assets
Credit performance of a company, bond or lots of bond.
Related Products
Credit-linked note
Precautions
Investors need to pay attention to the structure of the product and the risk of changing in the credit rating of related assets and also credit default events.
Main Risks
There are many types and forms of structured products. Investors should beware of the following investment risks, including but not limited to:
- Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause losses;
- Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors cannot sell contracts before maturity. Therefore, investors can only enter into liquidation / unwinding transactions with the issuer, the price is determined by the issuer, and the transparency is low.
PRINCIPAL PROTECTED STRUCTURED NOTE
Principal protected structured note is generally a medium to long-term investment product. The investment returns depend on the performance of the underlying stocks and it provide principal-guaranteed returns upon maturity.
Generally, it is suitable for customers who are seeking for capital protected investment.
Generally, it is suitable for customers who are seeking for capital protected investment.
Category
Equity-linked
Common Assets
Performance of an individual stock, a basket of stocks or a stock index
Related Products
Sharkfin Structured Note
Precautions
Investors are subject to the risks of stock price fluctuations, the effects of dividends and corporate actions.
This product is with a principal protected feature, but the principal protected feature depend on the issuer’s creditworthiness.
This investment product is designed to be held until maturity. If you try to early terminate your investment, you may receive an amount which is substantially less than your initial investment amount.
Investors would bear the credit risk of the issuer or the guarantor. If the issuer or the guarantor is bankrupted or closed down, the investment principal may be suffered, and it may lose part of or all of the principal.
This product is with a principal protected feature, but the principal protected feature depend on the issuer’s creditworthiness.
This investment product is designed to be held until maturity. If you try to early terminate your investment, you may receive an amount which is substantially less than your initial investment amount.
Investors would bear the credit risk of the issuer or the guarantor. If the issuer or the guarantor is bankrupted or closed down, the investment principal may be suffered, and it may lose part of or all of the principal.
Main Risks
There are many types and forms of structured products. Investors should beware of the following investment risks, including but not limited to:
Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause loss
Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors might able to unwind transactions at the bid price that is determined by the issuer and the transparency is low.
Credit risk: The credit risk of the issuer or guarantor of a structured product. When the issuer or guarantor goes bankrupt or fails, even if it is a principal-protected product, the investment principal will still cause loss
Liquidity risk: Structured products generally do not provide a secondary market. Due to the lack of a secondary market, investors might able to unwind transactions at the bid price that is determined by the issuer and the transparency is low.
Cumulative Option Contract
Cumulative option contracts are "hybrid" products that can be divided into Accumulator and Decumulator, which are a combination of a series of synthetic forward contracts. For Accumulator, investors will buy the relevant stocks at a specified price (lower than the Spot price) every day according to the contract, while Decumulator will sell the relevant stock at the specified price (higher than the Spot price) every day according to the contract. Both of the above would have a KO feature that the contract will be terminated immediately once the KO event occurs.
As for the options structure, for example Accumulator, is equivalent to buying call options and selling put options at the same time and all of those options are with KO feature.
As for the options structure, for example Accumulator, is equivalent to buying call options and selling put options at the same time and all of those options are with KO feature.
Cautions and Main risks
- Admission fee is high. Although the minimum investment amount depends on different counterparties, the requirement would be HK $ 2,000,000 or more normally;
- If investors would like to early terminate the contract before expiration, they might have to pay unwind cost that is much higher than expected;
- When the price of the underlying stock rises (falls ^), the contract held by investor may trigger the "Knock-out" event. Once triggered the "Knock-out" event, the relevant contract will be terminated immediately, and investor is no longer able to continue buying (selling ^) the stock at the specified price;
- When the price of the underlying stock falls (increases ^), the investor buys (sells ^) the stock at the specified price, and the customer is obliged, may suffer loss as a result.
- Specific terms can also be added to the cumulative option contract: if the price of the relevant asset falls (rises ^) through the strike price, the client must accept to buy (sell ^) two or three times the number of shares at the specified price.
- If the counterparty breaches its obligations or becomes insolvent, might not be able to buy (sell) the shares at the specified price, and therefore, investors may lose the entire investment amount.
- ^Is a Decumulator
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