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Global US-Dollar Shortage - Are We Already in a Recession?

China Selloff Threatens $27 Billion of ‘Snowball’ Derivatives​

  • Structured products tied to China indexes at risk of losses
  • Hitting knock-in level may trigger selling of index futures

By Bloomberg News
October 27, 2023 at 8:18 AM GMT+8
Updated on
October 27, 2023 at 10:00 AM GMT+8
Save

2:48

Another 10% decline in a major Chinese equity gauge may trigger a wave of selling in index futures tied to structured products, adding fresh risks to the slumping stock market.

Investors face losses in complex “snowball” derivatives at maturity when a benchmark falls below a so-called knock-in level. For those tied to the CSI Smallcap 500 Index, the average threshold is 4,865, according to estimates by China International Capital Corp. The gauge traded at around 5,417 as of 9:52 a.m. Friday.

A relentless rout in Chinese stocks has turned the spotlight on the risk of those derivatives, which promise bond-like coupons as long as underlying assets trade within a certain range.

Snowballs, similar to autocallables in other countries, gained popularity in 2021 among China’s institutional and wealthy investors and have expanded into a market worth $27 billion. Brokers may rush to liquidate hedging positions once the knock-in level is reached.
 
Investors in South Korea, another huge market for structured notes, have billions of dollars worth of bets placed on products tied to the Hang Seng China Enterprises Index that are also at risk.

Snowball notes with the CSI 1000 as the underlying index have an average knock-in barrier at 4,997, according to CICC estimates. That’s about 14% below Friday morning levels.

Chinese stocks have had a rocky year, with multiple rounds of policy stimulus failing to put a floor under the market’s slide. Persistent property woes, geopolitical tensions and a muted economic outlook have all sapped sentiment toward the nation’s assets.
 
The CSI 500 and CSI 1000 — the two most popular underlying indexes for snowball derivatives — have each fallen more than 7% this year, even after a rebound in recent sessions following a rare mid-year budget expansion. The gauges plunged more than 20% each in 2022.

Regulators have tightened their grip on those exotic derivatives to prevent them from being marketed to retail investors as fixed-income products. The outstanding size of snowball derivatives onshore was 200 billion yuan ($27 billion) at the end of July, according to the CICC note, based on figures from the Securities Association of China.

“If there is forced selling of index futures, the impact could spill over as the drop in derivatives will hit sentiment or could force closing of long stock positions,” said Yu Yingbo, fund manager at Shenzhen Qianhai United Fortune Fund Management Co. Ltd. Still, the regulators should be less worried due to the tighter oversight in recent years, he added.
 
CICC estimated that any selling of index futures triggered by the breach of knock-in levels will still have limited impact on the spot stock market, as traders will reduce positions in a “diversified manner” and the volume will be small when compared to the total futures market.

— With assistance by John Liu and April Ma
 

China Rout Set to Roil $71 Billion Korea Market for Exotic Notes​

2023-10-25 7:21 PM / Source: YahooFinanceCA

(Bloomberg) -- Kim Hyun-Sook is bracing for massive losses on her 100 million won ($74,000) investments in structured products tied to Chinese stocks. Most...​


Kim Hyun-Sook is bracing for massive losses on her 100 million won ($74,000) investments in structured products tied to Chinese stocks.Apple Plans AirPods Overhaul With New Low- and High-End Models, USB-C Headphones

“I wasn’t worried because among the products that I invested in the past, an underlying index has never gone below the knock-in barrier,” said Kim, who has bought structured securities for two decades, referring to a level below which investors can lose their money.

Most of the HSCEI-linked contracts come due in the first six months of next year, compressing the pain. April is the peak with 2.4 trillion won due, according to Samsung Securities’ analysis. Back then, China’s zero Covid-policy protected the economy and pandemic-related exports boomed, leading to almost 19% growth in the first quarter. The HSCEI —- which was used as an underlying asset in 40% of newly-issued equity-linked securities in Korea in the first half of 2021 — had advanced about 43% from the pandemic low to its peak that year. headtopics.com

The nation’s retail investors are known for their embrace of risky bets, with big stakes in digital coins, growth stocks like Tesla Inc., and overseas properties.Kim, who has bought 18 ELS products tied to the HSCEI, said she is “bracing for massive losses.” Two of the notes were issued in May 2021 when the gauge was above 10,000. It currently trades below 5,900.

“Traditionally, South Korean autocalls have provided a steady 7% annual return over the past 15 years. However, as market dynamics change, investors may think twice before reinvesting in these products,” said Tiago Fernandes, head of data and platform at WSD, a structured products software provider.No One Understands Corporate Boycotts Like This Former Trump Researcher headtopics.com
 

Thrifting in Singapore: A relaxing escape for a stressful mind?​

How buying pre-loved items is not only about sustainable fashion, but also a powerful ally in boosting mental well-being​

Nisha Rahim
Nisha Rahim
Updated Fri, 27 October 2023 at 11:43 am SGT·7-min read


SINGAPORE — In Singapore, a shopping revolution is quietly unfolding, reshaping perspectives on retail therapy.

Thrifting - the act of buying used items - was once confined to budget-conscious and eco-conscious consumers, but has now become a wellness trend that uplifts the spirits of those who embrace it.

In fact, the resale market for used clothing, shoes and accessories is on the rise, with more people opting for second-hand items.

According to the recent ThredUp 2023 Resale Report, the global used clothing market is expected to reach US$350 billion (S$479 billion) by 2027, nearly doubling its current size.

As the allure of thrift stores continues to grow, Yahoo Southeast Asia spoke with four local thrift shops and platforms to uncover the story behind this retail renaissance, and how it is positively impacting shoppers' mental well-being.
 
https://www.straitstimes.com/singap...s-reached-record-levels-at-577-million-tonnes


In 2021, industrial emissions accounted for the bulk of emissions at 44.4 per cent, closely followed by the power sector, which accounted for 39.2 per cent of total emissions.

Transport was the third-largest contributor, accounting for 14.2 per cent of total emissions.

That means add up all the 3 sources is 97.8% liao of Greenhouse Gas





Singapore has a long-term national climate target of reaching net-zero emissions by 2050.

In line with this, it will be reducing emissions to around 60 million tonnes in 2030 after peaking emissions earlier.

This means that Singapore’s emissions will grow to around 65 million tonnes between 2025 and 2028, before starting to fall towards the end of this decade and reaching net zero by 2050.
 
k1976 said:

Thrifting in Singapore: A relaxing escape for a stressful mind?​

How buying pre-loved items is not only about sustainable fashion, but also a powerful ally in boosting mental well-being​

Nisha Rahim
Nisha Rahim
Updated Fri, 27 October 2023 at 11:43 am SGT·7-min read


SINGAPORE — In Singapore, a shopping revolution is quietly unfolding, reshaping perspectives on retail therapy.

Thrifting - the act of buying used items - was once confined to budget-conscious and eco-conscious consumers, but has now become a wellness trend that uplifts the spirits of those who embrace it.

In fact, the resale market for used clothing, shoes and accessories is on the rise, with more people opting for second-hand items.

According to the recent ThredUp 2023 Resale Report, the global used clothing market is expected to reach US$350 billion (S$479 billion) by 2027, nearly doubling its current size.

As the allure of thrift stores continues to grow, Yahoo Southeast Asia spoke with four local thrift shops and platforms to uncover the story behind this retail renaissance, and how it is positively impacting shoppers' mental well-being.
Click to expand...
sinkie unkers buy used panties to sniff?
 
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