It takes structuring expertise, sophistication and a good read of markets to engineer shariah-compliant structured products that perform, especially amid an uncertain and volatile global macroeconomic and markets backdrop.
HSBC Amanah demonstrated these attributes last year, developing a range of thematic products across currencies and tenors to suit the risk appetite of a wide range of investors. Its chief executive is Raja Amir Shah Raja Azwa.
Leveraging the structuring and investment expertise of the broader banking group, HSBC Amanah offers structured products across principal protection, currency, tenor, payoff and underlying.
Of several notable product launches across the year, four stand out. They were structured to enable investors to express a view on four key themes impacting global financial markets: sustainability; inflation; economic uncertainty; and the outperformance of US tech companies.
The first and second were two-year, dollar-denominated, principal-protected structured products, with profits linked to the performance of the MSCI World Islamic ESG Universal Screened index, and the performance of a gold-referencing exchange-traded fund, providing an inflation hedge.
The other two were a Malaysian ringgit-denominated, five-year, principal-protected structured product linked to a basket of defensive or consumer staple stocks (for instance McDonalds, Coca-Cola, Starbucks and Domino’s Pizza), and an Australian dollar-denominated, six-month, note linked to the performance of global microchip firm, Nvidia.
HSBC Amanah demonstrated structuring expertise, sophistication and a good read of markets to engineer shariah-compliant structured products that perform
While higher rates have underpinned investor demand for principal-protected products across multiple currencies, the strong performance of some core equity markets last year – the S&P500 delivered returns of about 24% – has led to an increase in risk-taking by some investors, driving demand for non-principal protected products.
The Nvidia trade is one such example. The product offers a target of 5% a year profit, payable monthly if the performance of the underlying stock is above 69% of its initial level, but is at risk if the price performance falls below this.
