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Sales of index, derivatives-tied securities dip in Q3

Sales of index and derivatives-linked securities in South Korea plunged in the third quarter as stock markets remained bearish, data showed Wednesday.

The combined value of equity-linked securities and derivatives-linked securities issued in the July-September period came to 20 trillion won ($17.7 billion), down 39.7 percent from a quarter earlier, according to the data from the Financial Supervisory Service.


The products are structured to track the performance of underlying assets, not guarantee the principal, as investors prefer instruments that promise higher yields.

The issuance of ELS products dropped 42.1 percent on-quarter to 14.3 trillion won in the third quarter as investors shunned them amid a slump in the stock market.

ELS refers to hybrid debt securities whose returns are determined by the performance of underlying equities. ELS products track benchmark stock indexes, including the Korea Composite Stock Price Index 200.

Sales of DLS instruments, which track interest rates, currency values and other underlying assets, also slipped 32.7 percent on quarter to 5.7 trillion won in the third quarter.

Investors in ELS and DLS products posted a combined return of 300 billion won in the third quarter, down 500 billion won from a quarter earlier, according to the data. (Yonhap)