Views from the Asia trading floor

The good momentum which characterised Asian equity markets in 2017 has continued at the beginning of 2018, and even accelerated. Chinese stocks listed in Hong Kong and the US put in a stellar start in January: the HSCEI Index gained 15.7% over the month, dwarfing the impressive 5.72% gains of the S&P 500 and 6.5% of the DJ EURO STOXX 50 (all in US dollar terms). As a collateral benefit, we estimate that overall volumes of structured product transactions in Hong Kong and Singapore grew by 30% to 50% on the same month last year. It is interesting to notice that the average size of transactions has also increased significantly in recent months, partly due to systematic reinvestment of returns. Also, around half of the volume of structured products transactions done by our bank in Hong Kong and Singapore was in bonus-enhanced notes, or BENs. These are growth-type pay-offs where investors participate in the rise of the underlying asset’s price for as long as this rise (and the product) can last. The success of this type of products might give an indication of Asian investors’ general confidence in equity markets right now.

On the business side, the Commerzbank Equity Insight 2018 roadshow took place in Singapore, Hong Kong, Bangkok, Seoul, and Tokyo. This is our annual seminar where all our Asian clients are invited to hear a mix of research and product presentations. Alongside the 2018 Outlook from our Cross Asset Research and our Asian economist, the major investment themes included the active versus passive debate, the appeal of Chinese equity markets and the eternal interest in ETFs as an efficient investment instrument. EMC Asia is grateful to our Asian clients for attending, and we already look forward to next year’s event.