Daishin Securities will launch its first two-year equity-linked bond (ELB), in a move aimed at strengthening its wealth management (WM) business under newly appointed CEO Jin Seung-wook by diversifying its lineup of financial investment products.
According to the financial investment industry on Tuesday, Daishin Securities is preparing to roll out a two-year ELB during the first half of this year. The brokerage has so far sold ELBs primarily with six-month or one-year maturities, making this its first product with a two-year structure.
Industry observers widely expect the underlying asset of the ELB to reflect the buoyant domestic stock market. Among recent ELB issuances by brokerages, Kyobo Securities in February issued an ELB using the KOSPI 200 Index as its underlying asset. KB Securities also launched an ELB tied to the same index in August last year.
The diversification of Daishin Securities' financial investment product lineup is seen as reflecting the firm's push to expand its WM business targeting individual clients. Jin Seung-wook, who took the helm of Daishin Securities last month, is said to have a strong commitment to bolstering the WM and artificial intelligence (AI) divisions.
The move also appears to be driven by the fact that ELBs are regarded as an alternative to the deposit and savings products offered by commercial banks. ELBs are similar in nature to deposits in that principal is preserved unless the issuing brokerage goes bankrupt. While returns vary depending on maturity, ELBs offer interest rates in the 3% to 4% range—at least one percentage point higher than deposit rates hovering around 2%—which analysts say could attract investors looking to park short-term funds while seeking higher yields.
