Maybank: structured deposits offset fall in structured notes activity

Maybank Singapore, which saw a 30% increase

In Trading Volume Of Structured Products

in 2021, started 2022 with a plan to scale up its structured directional dispersion warrants.

2022 performance and outlook for the new year.

2022 was generally a challenging year for the structured products business as a result of the ongoing Russia-Ukraine war and falling equity markets with investors being “hesitant or apprehensive to invest in structured products which are not principal protected on maturity in an uncertain macroeconomic environment”.

products business with non-

currency pairs sometimes with an early termination (callable) feature.

Malaysian investors are leaning towards shorter tenor and principal protected structures – namely callable fixed rate notes, as well as bullish/bearish shark fin structured notes, said Tan, adding that shark fin notes gained traction because they protected the capital invested and allowed investors to bid on the upside performance (for bullish view) or the downside performance (for bearish view) of equity indices, subject to the participation being terminated if the asset price breaches a certain level.

The new warrants business was launched as a response to demand from investors seeking to explore other yield enhancement solutions beyond autocallable structures. With an open architecture model, Maybank Singapore currently works with a list of more than 10 investment banks active in the structured products market.

In Q3 22, Maybank Investment Bank entered Thailand’s structured products market with its first structured note on 23 August to end the year with almost 30 structured notes issued worth US$5.8m-equivalent.

In the meantime, the investment banking arm expanded its offering with a range of long/short structured warrants on Bursa Malaysia, tracking eight Hong Kong-listed stocks.

SRP spoke to Alice Tan (pictured), head, private and head of products and investment solutions at Maybank Singapore, to recap on the bank’s

“Structured notes volumes in 2022 declined in line with the industry by around 50% to 70%. That said, Maybank Singapore’s tranche series of structured deposits with principal protection rolled out last year, were well-received by retail investors as they were all fully subscribed.”

The bank offset the decline in structured notes activity with its range of structured deposits which resonated with Malaysian investors as they offered full protection on the capital invested and offered a fixed coupon as well as a variable bonus interest linked to FX

“We were positioned defensively in equities for a large part of 2022, seeking shelter in Asean markets such as Indonesia, as well as sectors including consumer staples and healthcare that are more resilient,” said Tan.

According to Tan, since the start of 2023 the bank has maintained an underweight stance on equities but is looking “to turn more constructive on risk assets once a point of inflection is reached - in terms of inflation, rates and growth”.

Tan also noted that because of the difficulty to time the market bottom during a transition phase, investors can use relevant structured products to participate in the potential upside rebound, while enjoying some downside protection.

“We see some pickup in interest in structured products in the first half and expect to see a stronger recovery in the second half of the year,” Tan said. “In 2023, we would continue to focus on structured solutions with principal protection features given the lingering macro uncertainties.”