meek-investor

UOB's Structured Deposit 2013 Series was eye-catching as 9.3% looked quite interesting: Other promotional information: 1 . Total Guaranteed Fixed Interest of 9.3% of the Principal Amount over 5 years and 11 months (equivalent to an effective interest rate of 1.5687% per annum) 2. 100% Principal Amount guaranteed when held to maturity.  This structure product has a bonus interest component linked to 5 Singapore companies' shares price performance: Potential Bonus Interest of up to 10% linked to 5 Singapore Company Shares Shares in Underlying Basket DBS Group Holdings Limited ("DBS") Keppel Corporation Limited ("KEP") Sembcorp Marine Limited ("SMM") Singapore Airlines Limited ("SIA") Singapore Press Holdings Limited ("SPH")   The potential bonus will be given out if all the above 5 stocks are above 105%, compared with the initial stock prices when the structure product begins. Assuming an investment amount of S$10,000, ...

We are supposed to diversify our investments, or not putting all eggs into one basket.  This could reduce exposed risk, and in case one investment failed badly, will not affect the overall health of the full portfolio.  Definitely we would not want one bad egg to affect all the eggs in the basket. However, those toxic structured products that were sold before Lehman Brothers' collapse, although having many component companies in their fund structures, did not work this way.  Just one bad egg (Lehman Brothers) and the whole product failed. Same with JP Morgan Asia Confidence Notes.  When we invest money into 4 markets, we hope to diversify.  And if one market fared badly, we do not want it to affect the whole investment.  However, in JP Morgan Asia Confidence Notes's structure, any one market will drag the whole portfolio down.  Since if any one market fall 50%., the trigger event would activate, and does not take in...

I invested $50K into JP Morgan Asia Confidence Notes in June 2008.  I received the first quarterly payout of $937.50 in September 2008. Almost immediately after I received my first quarterly payout, in mid September, Lehman Brothers collapsed.  After that event, the global financial market began a period of extreme volatility and all the stock indices fell sharply. Suddenly, most of the structured products, which were previously promoted and sold as "high returns and low risks" have became hot potatoes and their risks greatly escalated.  On Sep 18, 2008, The Straits Times reported that a structured product sold by DBS, High Notes 5 - with a promised annual return of about 5 per cent, was at great risk and warned that the investors may lose their entire principal in that Lehman-linked product. Subsequently, other structured products have fallen one by one.  News received that another DBS structured products -...

How exactly did JP Morgan Asia Confidence Notes work?  I have thrown away the product brochure.  But I remembered it was something like: JP Morgan Asia Confidence Notes are tied to Singapore, Malaysia, Thailand and Taiwan stock indices and pay 7.5% p.a. coupon fixed on a quarterly basis, but is callable every quarter. Scenario 1 : If the indices go above the initial index values At the quarterly observation date, if all the 4 indices have gone above the initial index values, the bank has the right to "call" the product, i.e., the bank will redeem the product by returning the investors the principal with that quarter's coupon payment.   In more details, the notes would end if the closing levels of all four indices at the observation date - either concurrently or separately on different valuation dates including preceding ones - is higher than their respective initial levels. For example, at observation da...

Let's talk about my experience with the purchase of a structured product.  Of course that was before the collapse of Lehman Brothers, Sep 2008. It was one day in June 2008 when I renewed my fixed deposit at the bank.  That day I learnt that the bank have assigned a "personal banker" to "take care of all my financial matters" with the bank.  This "personal banker" told me that interest rate for FD was too low, and introduced a structured product for better returns. The JP Morgan Asia Confidence Notes has the following structure: 1. Tenure of 2.5 years 2. 7.5% p.a coupon fixed – payable quarterly. 3. Based on Singapore, Malaysia, Thailand and Taiwan Indices movement.  The buffer level for Principal to be affected is 50% of index (index level at start of tenure) for any of the 4 countries.   Meaning one of the indices must fall by 50% (at observation date) for the Principal to be affected. 4. Early cal...