Korea autocalls pose risk to structured products market

Autocallables in South Korea have lost product providers money because of the disappointing performance of the Kospi 200, the proxy for the local stock market. Additionally, the destruction of the warrants market means banks have to take on the risk themselves. Yet investors are as keen on these structured products as ever. Vita Millers reports

Investors in South Korea remain devoted to autocallable structured products based on the Kospi 200, the country's benchmark index. The flat to downward movement of the Korean stock market, matched with low volatility - both of which are in sharp contrast to stock markets rising in Japan - have failed to deter investors. Fierce competition between local securities houses and international banks has coincided with government intervention that has almost completely killed off the local warrants