Equity Linked Note (ELN)
ELN is suitable for long-term investor who save cash and prepare to buy fundamental stock when its price declines at Desired Price. Rather than depositing cash with low interest rate paid by the bank, investor will earn higher premium (yield 5%-35% per year) by depositing your money with KGI and KGI will buy stock at Desired Price for investor.
* Desired Price is a price of fundamental stock that an investor aims to accumulate following declining in price and Desired Price will be determined on note issuing date.
ELN Payoff
1. Receiving interest payment (5%-35% per year) depending on choices of underlying stock, tenure and Desired Price
2. Receiving cash or underlying share
- Closing price on fixing date ≥ Desired Price, KGI will return investor the initial proceed
- Closing price on fixing date < desired price, investor will receive shares at cost equivalent to Desired Price
How to invest in ELN?
1. Choose fundamental stock and determine Desired Price ( ELN with 1 – 3 month tenure)
2. Investor pays discounted on face value with yield about 5% -35% per year
3. Investor will receive the return that depends on underlying stock, tenure and Desired Price
Example
ELN Quotation: Underlying stock on XYZ
Underlying
Stock |
Tenure |
Strike
(%) |
Spot Price
(Baht) |
Strike Price
(Baht) |
Offering
Price
(%) |
Annual
Yield
(%) |
| XYZ |
1 Month |
95.00% |
100.00 |
95.00 |
98.00% |
24.00% |
On issue date;
Investor invests ELN with 5,000,000-baht face value with features as follows;
- Underlying stock
: XYZ
- Buying price of XYZ when XYZ price drops(Strike Price)
95 Bath (Current Spot Price is 100 Baht)
- Tenure
: 1 month
ELN annualized yield at 24%
Next 2 business days;
Investor pays discount from face value for 4,900,000 Baht (Calculated by face value x Offering Price (%))
On fixing date (1 month after issue date);
1. Yield at 24% per year or equal to 100,000 Baht
2. Investor will receive cash or underlying stocks depend on the condition as below;
• Closing price of XYZ ≥ 95 Baht
Investor will receive 5,000,000 baht
• Closing price of XYZ < 95 Baht
Investor will receive XYZ shares at the cost of 95 Baht (shares of XYZ equivalent to face value for 5,000,000 Baht)
Structured Note (SN) is a combination between bond and option contract. This structured product would work to increase the bond's returns.
SN = Bond ± Option
Structured Note is short-term structured products whose investment returns are primarily linked to the performance of the underlying asset.
The feature of SN can be customized to fit client’s market view. The underlying can be SET50 Index, Single Stock, Basket of Stocks and ETF, depends on the type of equity linked product invested.
Source : BLOOMBERG/NEWSROOM : HONG KONG (STRUCTURED NOTE as of 24 July 2014)
Why KGI?
KGI, we are the first broker who received an OTC derivatives license from SEC and lead OTC Derivatives provider in Thailand.
Structured Note (SN), also known as Equity Linked Note (ELN), is one of our equity derivatives products which have been active in the market since 2005. We experienced and familiar with the product among institutional investors. These days, we are allowed to sell SN to High Net Worth Investors (HNW).
Our SN has innovated from KGI Taiwan who is the leader in this product. Therefore, we can provide you a variety type of SN, fitting in every market situation. Currently, 7 SN are available for investors to choos
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
Our SN products are designed to meet specific investment needs according to each market situations; Sideway Up, Sideway Down, Targeted Range with Linked Fluctuation and Highly Fluctuated.
| Your Market View |
Our SN |
| Sideway Up |
|
| Sideway Down |
|
Sideway
(Non-directional) |
|
Targeted Range
with Linked Fluctuation |
|
| Highly Fluctuated |
|
|
ELN is a type of structured note fit for sideways market. Clients who desire to buy a blue-chip stock at the strike price will be able to enhance the yield while waiting for the price to fall by buying ELN at a discounted price. If the share price falls to the strike price at fixing date, clients will receive the stock at the strike price. On the other hand, clients will receive a principal back if the share price does not fall to the strike price.
Regardless of share price, clients will receive enhanced yield higher than market deposit interest rate (5% - 35%), depending on time to maturity, strike price and selected underlying stock.
- Close price at fixing date ≥ Strike price, receiving the principal with interest
- Close price at fixing date < Strike price, receiving shares at strike price with interest
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
In a sideways down market, clients may incur losses and have difficulty in making profits. Reverse ELN is an efficient tool for making profits in this situation for clients who desire to hedge against portfolios. Reverse ELN can be bought at a discounted price and has a similar return as
Equity Linked Note.
- Close price at fixing date ≤ Strike price, receiving the principal with interest
- Close price at fixing date > Strike price, receiving the principal with interest and loss from the price difference between close price and strike price
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
Range ELN a type of structured note fit for sideways market within an anticipated range. Clients are able to design an underlying stock price range for receiving enhanced yield. The narrower the range is, the higher the yield is.
At fixing date, if the share price is between the anticipated range, clients will receive a principal with interest back. If not, clients will receive a principal without interest.
Range ELN is principal-protected even the share price is out of the range. It is suitable for clients who desire a return with principal protection.
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
For clients who desire higher yield than normal ELN, All-Win ELN will enable clients to earn yield 2-4 times higher than normal ELN, depending on a selected underlying stock. The advantage is that when clients desire to buy multiple stocks but are uncertain which one will fall. Clients are still able to invest in this structured note by designing strike prices as a stock basket, at least 2 stocks.
At fixing date, if all underlying stock’s close prices are higher than the strike prices, clients will receive a principal with interest. However, if one of them has a close price lower than the strike price, clients will receive the least performing stock.
Least performing stock is a stock with the lowest return calculated from a difference between close prices at fixing date and value date.
At value date, ABC price is ฿125, XYZ price is ฿100, UVW price is ฿200 and strike price is 95%.
At fixing date
| Stock |
Close price |
Price at value date |
Final Performance |
| ABC |
130.5 |
125 |
4.4% |
| XYZ |
110 |
100 |
10% |
| UVW |
189 |
200 |
-5.5% |
As a result, the least performing stock is UVW. Clients will receive UVW shares at its strike price on the maturity date.
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
In a narrow-range sideways market, making profit from stock trading could be difficult. For clients who desire to make profits in this situation, investing in Double-Yield ELN allows clients to make profits from an underlying stock moving in an anticipated range and will receive enhanced yield higher than market deposit interest rate and regular ELN, depending on time to maturity, strike price and selected underlying stock.
- Close price at fixing date > Upper Strike price, receiving the principal with interest and loss from the price difference between close price and strike price
- Upper Strike price ≥ Close price at fixing date ≥ Lower Strike price, receiving the principal with interest
- Close price at fixing date < Lower Strike price, receiving the principal with interest and loss from the price difference between close price and strike price
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
In a sideways or slightly uptrend market, making profits from stock trading could be difficult. Buying the same number of shares at a strike price is a good strategy. Stock Accumulator is a type of ELN that buying a stock on a daily basis and fit for this strategy.
On daily basis, if close price is lower than Knock-out price, clients will receive the specified number of shares at a strike price and continuously accumulate the shares until maturity date. However, if close price is once higher than Knock-out price, the ELN will be matured and clients will receive the principal back and accumulated shares.
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
Twin-Win ELN is a type of structured note similar to
Range ELN but fit for investors who expect a highly volatile market and believe underlying price will reach out of presetting range.
It is suitable for clients who desire a higher return than market deposit interest rate with principal protection.
At fixing date, if the share price is between the range, clients will receive a principal without interest back. If not, clients will receive a principal with interest (Rebate rate).
Please contact us via
Tel
: 02-658-8921 to 27
E-mail
: ed-mkt@kgi.co.th
