3Q Last Year ELS Issuance Down 31.6%... Impact of Weak Hong Kong H Index

[Asia Economy Reporter Lee Jung-yoon] In the third quarter of last year, both the redemption and issuance amounts of derivative-linked securities (ELS+DLS) decreased due to the deterioration of the global financial market environment.

According to the Financial Supervisory Service on the 8th, the issuance amount of derivative-linked securities in the third quarter of last year was 11.3 trillion KRW, down 3.4 trillion KRW from the previous quarter, and the redemption amount was 8.4 trillion KRW, down 200 billion KRW. The balance at the end of September last year was 97.2 trillion KRW, an increase of 2.3 trillion KRW compared to the end of the previous quarter, maintaining an upward trend since the end of September 2021.

During the same period, the issuance amount of equity-linked securities (ELS) was 7.9 trillion KRW, a decrease of 31.6%. Due to the weakness of the Hong Kong H Index and instability in the global financial market, investment demand declined, resulting in decreases in both principal-protected (2.3 trillion KRW) and non-principal-protected (5.7 trillion KRW) securities compared to the previous quarter.

The issuance amount of index-type ELS was 6 trillion KRW, down 31.4% from the previous quarter, but its proportion remained similar at 76.2% compared to 76.0% in the previous quarter. The issuance amount of stock/mixed-type ELS was 1.9 trillion KRW, down 32.2%, with a similar proportion of 23.8% compared to the previous quarter. ELS with three underlying assets had the highest issuance amount at 3.9 trillion KRW, but its proportion decreased by 5.2 percentage points to 49.8% compared to the previous quarter.

The issuance scale by underlying assets was in the order of S&P 500 (5.1 trillion KRW), EuroStoxx 50 (5 trillion KRW), KOSPI 200 (3.5 trillion KRW), and Hong Kong H Index (1.1 trillion KRW).

The total redemption amount of ELS during the period was 6.1 trillion KRW, similar to the previous quarter. The outstanding issuance balance of ELS at the end of September last year increased by 1.9% to 68.1 trillion KRW.

Additionally, the issuance amount of derivative-linked securities (DLS) was 3.4 trillion KRW, up 7.2% from the previous quarter. The issuance amounts by underlying assets were interest rates (2.5 trillion KRW), credit (800 billion KRW), commodities (100 billion KRW), and stocks and others (40 billion KRW), in that order.

During this period, the redemption amount of DLS was 2.3 trillion KRW, down 8.2%, and the outstanding issuance balance increased by 3.7% to 29.1 trillion KRW.

This content was produced with the assistance of AI translation services.