HSCEI autocallable hedging hitting forex market, say dealers

Dealers flock to Hong Kong dollar options and forwards markets amid depeg fears

China volatility has put pressure on the Hong Kong dollar peg to the US dollar

Attempts by issuers to rehedge structured products linked to a falling Chinese equity index have had a knock-on effect on Hong Kong dollar foreign exchange options and forwards, according to dealers.

Equity-linked autocallable products referencing the Hang Seng China Enterprise Index (HSCEI) and sold to Korean retail investors have been under pressure since the start of January, following a plunge that saw the index fall from more than 9,000 points to a low of 7,823.

With the investors paying in

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: