Chinese snowball revenues melt away

Securities firms see falling revenues in the index-linked trades, but struggle to replace their profitability

The structured products known as snowballs were once a star earner for Chinese securities houses. But sales of the autocallables fell by around two-thirds last year, as a bearish equities market stemmed new investment inflows.

Investors are now exploring alternatives such as selling single-name options, but the market is limited in terms of who can offer these products and hedging is far less capital efficient for securities firms.

“It’s very difficult to find replacements for snowballs,” says