Index-linked products and downside protection drive investor interest in Asia

The collapse of equity prices since April in some large structured products markets in Asia such as South Korea has left investors facing substantial mark-to-market losses, and the prospect of being cash-locked for several years. But risk appetite remains robust for index products and new structures offering downside protection. Justin Lee reports

Volatility has hit sales of equity-linked structured products

The South Korean retail structured product market is characterised by a concentration of issuance and sales in capital-at-risk, equity-linked securities (ELS) featuring an autocallable structure in combination with a worst-of-option knock-in barrier. The market was worth an estimated $25 billion in 2010 and this year's sales have already surpassed 2010 totals, with an estimated $27 billion sold so far.

However the fall in global equity markets, including the Kospi 200 index, following the US