Issuance of complex equity notes in Asia passed $200 billion as affluent investors piled into accumulators and fixed-coupon notes
Money across Asia is pouring into complex equity notes at a record pace, with wealthy investors driving issuance past $200 billion this year, according to Bloomberg.
The jump is tied to structured products linked to Hong Kong and Singapore stocks, which climbed about 80% as families with deep pockets chase steady payouts and exposure to big tech names even after getting hit with heavy losses in earlier downturns.
Banks are seeing rising orders for accumulators, which force buyers to pick up shares at preset prices over time, and fixed-coupon notes that pay monthly income. Investors are betting that the region’s AI rally, not caution, is the thing to follow.
The activity comes at a time when equities across Asia are running hot on the back of the AI craze. Private banks are targeting their richest clients with structured notes tied to Alibaba and Tencent, two names now replacing earlier favorites like Nvidia.
The appeal is simple: more control over stock exposure and predictable payouts. But the structure also creates risk if prices fall below key levels.
Investors build positions through rising issuance
Tony Lee, head of global equity-derivatives strategy at JPMorgan Chase & Co., said issuance “was very limited for the last few years, up until September of last year,” and he pointed to the recovery in China as the main driver.
Tony said “the product underlyings have shifted from US stocks into Hong Kong stocks,” reflecting how regional sentiment changed as Chinese markets picked up this year.
Asia still leads the world in these deals, with more than 60% of global sales coming from the region in the first seven months of 2025, based on industry figures covering China and Hong Kong.
These notes usually deliver smaller top-end payouts than buying shares outright, but buyers want the monthly income, which is often higher than bond yields, and they want the built-in protections.
Still, the guardrails are not bulletproof. The collapse of Lehman Brothers in 2008, the start of Covid, and the long slide caused by China’s crackdown on internet giants all hit investors who held similar products.
Accumulators force regular buying at fixed prices. When markets rise, they give investors a discount. When markets fall, they force the buyer to pick up shares above the screen price.
At CA Indosuez Wealth Management, Ting May Woo said many of the most-traded accumulators require buyers to take double the original amount of Alibaba shares if the price falls more than 10% to 20% from the starting level. That doubling effect has become a common feature and has made investors more sensitive to sudden drops.
If any one of the three names falls 28% or more from the price at entry, the buyer must purchase shares at a higher price than what the market is trading at, or settle in cash at a loss. Every part of the deal depends on the relative performance of the stocks.
AI names drive returns across the region
Structured products tied to Chinese AI names are pulling in the most interest. Daniel So, senior trading strategist at Goldhorse Capital Management, said Alibaba is now the dominant underlying asset for structured notes issued across Asia this year.
Daniel said coupons tied to Chinese AI names usually fall between 10% and 20% annualized, while index-based products sit closer to 10% to 12%. The performance explains the demand.
Alibaba’s Hong Kong shares are up almost 90% this year, and the Hang Seng Tech Index gained 26% after years of lagging behind US tech benchmarks.
At Royal Bank of Canada, Kin Lok Lee said 30% to 40% of its equity-linked notes in 2025 were tied to Hong Kong names, up from 20% in 2024, when about 80% of the fixed-coupon notes followed US stocks instead. Daniel said “investors who buy these notes usually can accept the worst-case scenario, which is to buy these shares at pre-determined strike levels higher than market prices, because they hold the belief that these stocks will eventually recover.”
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