Structured product rides on Greater China and commodities growth

Written by Celine Tan
Tuesday, 15 September 2009 16:37

CIMB Group has launched its “Greater China and Commodities Income Protected Plus-i” structured product, a Syariah compliant investment product that combines equity and commodity investments with protection referenced to CIMB Islamic Bank Tier 2 Junior Sukuk.

The 10-year product rides on the growth story of the Greater China and commodities. “We believe China will continue to grow at 9% this year, as the growth rate is needed for its population to maintain socio-economic status,” says Chu Kok Wei, head of structured & banking products of CIMB Investment Bank Bhd. This in return leads to a continuous demand for broad-based commodities. “We foresees that the urbanization of the six billion population in China will expand consumption on commodities like energy, base metal and soft commodities. Thus, we are looking into its fundamental of supply-demand imbalances.”

The product also participates in the Greater China growth story via the commodities sector because it is not easy for foreign investors to get direct access to the Chinese market, says Chu. “We look into the Chinese stocks that are listed in the Hong Kong stock exchange since the Hong Kong Monetary Authority ensures good corporate governance and effective compliance. We also participate in the Taiwanese market, as we want to take advantage of the warming up of the relationship between Chinese and Taiwanese governments.”

The structured product offers protection on the investor’s principal sum and an average indicative gross protected profit of 4% per annum, payable semi-annually, when held to maturity. “In addition, it gives you a catch up profit once every two years, if all three reference indices’ average quarterly performance on observation date are at or above the threshold level,” says Chu. The reference indices are the MSCI Taiwan Index, Hang Seng China Enterprise Index and S&P GSCI Excess Return Index.

The minimum investment amount for the product is RM 250,000 and in further multiples of RM 50,000 thereafter. The offer period ends on September 25, 2009.