Asian investors review structured products strategies after losses

The collapse of equity prices since April in some large structured products markets 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

Upside from the downside: investors are putting in place strategies to protect themselves from equity falls

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

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