Seoul: South Korea's issuance of equity-linked securities (ELS) surged 19 percent year-on-year in the first six months, data showed Monday. The total value of ELS products issued from January to June reached 21.7 trillion won (US$15.6 billion), compared to 18.3 trillion won issued over the same period last year.
According to Yonhap News Agency, equity-linked securities are hybrid debt securities with returns determined by the performance of the underlying equity. Among these, ELS products tracking the KOSPI 200 as underlying assets accounted for the largest share, amounting to 8.9 trillion won. Those tracking the S and P 500 followed with 8 trillion won, while ELS products linked to the Euro Stoxx 50 and the Nikkei 225 reached 7.2 trillion won and 2.7 trillion won, respectively.
Despite the issuance surge, redemption in the first half of the year fell 43.5 percent from the previous year to 19.7 trillion won. By the end of June, the outstanding amount of ELS products stood at 53.6 trillion won, marking a 5.5 percent increase from a year earlier.
The Financial Services Commission has proposed a revision to the law governing ELS issuance. This proposed change aims to make it more challenging for financial firms to sell ELS products, targeting the prevention of improper sales. This comes after investors of ELS products linked to the Hang Seng China Enterprises Index experienced significant losses last year.