The stock market has since rallied further, sending many snowballs and DCNs through the knock-out levels
Snowballs grant investors bond-like coupons as long as the stock index they reference stays within a predetermined range – typically between 75 per cent and 105 per cent of the starting level.
A “knock-in” occurs if the lower end of the range is breached, handing the investor a potential loss equivalent to the drop.
When the market gains to the “knock-out” level, the investor gets paid the coupon for the holding period as the contract is terminated.
In April, CICC estimated the total market for snowballs and dynamic notes was about 100 billion yuan.
There’s a growing conviction among investors that any correction in the next year or two will not be steep enough to hit the downside cushion of the products, especially given the government’s commitment to support the market.
Source: Business Times
https://www.businesstimes.com.sg/compan ... ves-yields
