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Biz News Korea(Eng)

Korea’s equity-linked securities issues lowest in three years

Collected: 2016.12.06

Distributed: 2016.12.08

Source: Go Direct

South Korea’s equity-linked securities (ELS) market has slumped after delivering hefty losses earlier this year and is expected to finish 2016 in its worst performance in recent three years.

According to Korea Securities Depository Monday, a total of 39.5 trillion won ($33.7 billion) worth of ELS have been issued from January to November this year, more than halving from 69.3 trillion won in the same period last year.

Given the monthly average of around 4 trillion won in latest months, this year’s total issue would likely reach 43 trillion won, the lowest since 39.9 trillion won in 2013.

Appetite for ELS turned tepid after investors were burned from the rout in Chinese and Hong Kong stock markets early in the year, causing more than 4 trillion in losses for local institutions and individuals. Issues since then took stocks in the Europe and others as underlying shares. The market suffered another upset due to the British vote to exit the European Union in June.

A new regulation restricting ELS issues in Hong Kong H Index kept investment contained.

But industry watchers predict better performance in coming months as investors would be tempted to invest in the bullish U.S. stock market on expectations for revived economy under the administration of Donald Trump. The ELS also would be an appeal for bond investors looking for other options due to crash in the bond market on fears of higher interest rates in the United States.

By Choi Jae-won

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