Structurer of the year, Asia excluding Japan - UBS
Not many structured products providers have quite the same reach in Asia as UBS. The Swiss bank has established a strong client base that ranges from private banks, wealth managers, consumer banks, securities houses and brokerages, insurance companies and asset managers. Now UBS trades with more than 100 intermediaries in Asia.
"UBS's products are well structured, and its after-sales service is excellent," says Richard Yu, channel manager at Citibank in Hong Kong. "In terms of product innovation, it is definitely at the top end of providers."
Earlier this year, UBS developed an innovative hybrid product called the Currency Arbitrage Note for Citibank in Singapore. The product overlays constant portfolio protection technology (CPPT) on a long/short currency arbitrage strategy. The underlying strategy involves a carry trade, depending on investors' prevailing risk aversion as captured by the UBS Risk Index.
"The UBS Risk Index replicates and improves the performance of a carry trade," says Christopher Lee, managing director of equity risk management and head of cross-divisional intermediary business at UBS in Hong Kong. "As investors may not have access to some currencies or are unable to participate in carry trades, the Currency Arbitrage Note provides exposure to these currencies via one index."
Launched this year, the UBS Risk Index aims to quantify global market sentiment. It is calculated as an arithmetic average of separate factors: the equity volatility index (VIX), FX option implied volatilities (EUR, JPY), emerging market bond spreads relative to US Treasuries, gold prices, differences in stock returns between the S&P financials and utilities, high yield corporate bond spreads relative to US Treasuries and the relationship between US bonds and stocks.
In the past few years, structured products such as equity-linked notes and deposits have become popular among retail investors in the region. In order to captivate investors with a new and exciting theme, Standard Chartered Bank, one of the biggest retail banks in the region, turned to UBS for a FIFA World Cup-related product in February.
The Football Fever Series 1 & 2, distributed by Standard Chartered Bank across Asia (including Hong Kong) in June, was linked to eight country indexes and was designed to simulate the competition structure of the World Cup. The coupon payout was based on the progress of the outperforming indexes to the 'semi-final', the 'final' and the trophy, while eliminating underperforming indexes.
"UBS has managed to improve its offerings year after year when it comes to equity-linked investments," says Chew Sutat, senior manager at Standard Chartered Bank in Singapore. "It is ahead of the curve in a fast-changing environment."
What's more, Korea has emerged as a big player in the equity-linked notes market. And UBS is the dominant provider of privately placed equity-linked products for Samsung Securities, a brokerage and wealth management firm in Korea.
"The structured products market in Korea has grown over the past three years and we now estimate that market size is somewhere between US$15 billion and US$20 billion," says Min Park, Hong Kong-based managing director and head of Asian equity risk management at UBS. "We believe we currently have about a third of the market share in hedging structured products in Korea."
In September, UBS launched its first publicly distributed structured fund for the Singapore retail market. The fund, which is based on a buy-write plus put structure on the Dow Jones AIG Commodity Index, aims to generate quarterly income of 8% every year while limiting potential losses to a maximum of 10% through the purchase of 90% put options on the index. The fund is distributed by Standard Chartered Bank and Lantern Structured Asset Management, which is a wholly owned subsidiary of USB.
Why UBS won
UBS strives to work with new distributors and those contacted by Structured Products praised UBS for structuring innovative equity-linked products and delivering reasonable priced offerings. Few structurers have UBS's ability to bring new ideas to both the retail and high-net-worth space.
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