Bangkok--Jun 3--KGI
KGI has launched its new product, ELN (Equity Linked Note) as another
alternative for investors, particularly institutional ones. The new offering
would be profitable in both the upturn and the downturn. Meanwhile, the company
aims to become the leading designer of financial derivatives products that serve
all types of investors.
Naruemol Artamnuayvipas, Senior Vice President of the Equity Derivatives
Department, KGI Securities (Thailand) Plc. Co. Ltd., revealed that the company has
introduced a new product called ‘ELN’ or ‘Equity Linked Note,’ which is tailored
for institutional investors. ELN is an investment alternative for investors in
time of unstable market conditions, and so far many customers have expressed their
interests, while many more who have already invested are very satisfied with the
returns, as the product can be profitable regardless of the state of the market.
“KGI believes that the product will continue to grab the attention of
investors. The company aims to become the leading designer of equity and
derivatives products that will cover all segments of investors in the near future
in order to respond to their needs and offer them variety, specifically in
turbulent times like the present,” said the Senior Vice President.
“KGI’s ELN is a bond with the maturity of less than 270 days, whose
returns are tied to the stock price or the SET indices. The product will be
offered only to institutional investors or juristic person with at least ฿100
million in investment capital. Currently, it could not be sold to ordinary
investors yet.”
In general, ELN will be traded just like a normal equity or bond,
meaning the trading price will be the discounted price. At the time of the
contract expiration, if the stock price is higher or equal to the strike price,
the investor will receive the sum of money as denominated on the face value.
However, if the stock price is lower than the strike price, the investor will
receive the reference stock at the volume stipulated by the contract.
An example of KGI’s ELN trading (Please refer to ‘KGI Quotation’ below)
Stock Tenor Strike Spot Strike Value Date Settle Fixing Maturity Price Yield
(%)
A 30 Days 100% 100 100 5/9/2005 5/11/2005 6/6/2005 6/10/2005 97.50% 31.20%
Suppose on May 9, 2005, an investor buys the 30-day ELN, whose returns
are tied to 10,000 shares of Stock A, at the strike price of ฿100, the face value
of the ELN bond will be ฿1 million, which is calculated from the reference stock
volume multiplies the strike price. Therefore, if the spot price of Stock A is at
฿100 (equal to the strike price), the investor will purchase the ELN at ฿975,000
or 97.5% of the face value and will pay for the transaction on May 11, 2005 (or
two working days after the ELN contract was signed).
At the maturity date, if the price of Stock A at the fixing date is
higher or equal to the strike price, the investor will receive ฿1 million as
denominated on the face value or an annual ROI of 31.2% [(25,000/975,000)
(365days/30days)
]. If the price of Stock A is below the strike price, the
investor will receive 10,000 stocks as per the contract.
“The strength of ELN is that investors can make a profit regardless of
the economic scene depending on the chosen conditions such as maturity date, the
strike price, etc… These conditions will be shown on KGI Quotation, of which the
company will issue on a daily basis,” added Naruemol.
If you are interested and would like more information, please contact
the Equity & Derivatives Department, KGI Securities Plc. Co. Ltd. at tel.
0-2231-1111 ext 541-544; fax 0-2631-2664; or e-mail [email protected].
Soraya Pongprayoon Tel.02-663-3226 ext 66
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