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Value of outstanding derivatives-tied securities down in H1 amid bullish global stock markets

06:00 September 15, 2023

SEOUL, Sept. 15 (Yonhap) -- The outstanding value of derivatives-tied securities issued in South Korea dropped below the 100 trillion won (US$75.4 billion) mark in the first half of the year, on the upbeat stock markets of major economies, data showed Friday.

The amount of outstanding equity-linked securities (ELS) and derivatives-linked securities (DLS) came to 96.3 trillion won as of end-June, down 5.9 trillion won from six months earlier, according to data from the Financial Supervisory Service (FSS).

The FSS said the value of redeemed securities products surpassed the value of newly issued ones in the first half amid bullish stock markets compared with the same period last year, when stock markets showed poor performance due to the Russia-Ukraine war and interest rate hikes.

ELS and DLS are structured to track the performance of underlying assets but do not guarantee the principal amount, as investors prefer instruments that promise higher yields.

The outstanding value of ELS stood at 66 trillion won as of end-June, down 0.8 trillion won from a year earlier.

A total of 25.3 trillion won worth of ELS products were redeemed in the first half, offsetting the 21.9 trillion won worth of new issuances.

ELS refers to hybrid debt securities whose returns are determined by the performance of benchmark stock indexes, including the Korea Composite Stock Price Index (KOSPI) 200.

The value of outstanding DLS instruments, which track interest rates, currency values and other underlying assets, amounted to 30.3 trillion won, up 2.3 trillion won from a year earlier, but down 1.2 trillion won from six months earlier.

A total of 9.3 trillion won worth of DLS products were issued in the first half, while a combined 10.2 trillion won worth of DLSs were redeemed.

The logo of the Financial Supervisory Service provided by the agency (PHOTO NOT FOR SALE) (Yonhap)


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