Asia’s Complex Equity Note Boom: Affluent Investors Pour Over $200 Billion into Accumulators & Fixed-Coupon Notes

Asia's wealthy aren't just buying stocks anymore—they're engineering them. A tidal wave of capital, exceeding $200 billion, now floods into structured equity notes, with accumulators and fixed-coupon products leading the charge. Forget simple buy-and-hold; this is financial alchemy for the accredited few.

The Engine Room: How Notes Are Built

Banks bundle derivatives with traditional equity exposure, crafting bespoke risk-return profiles. Accumulators let investors buy more shares if the price dips—a leveraged bet on stability. Fixed-coupon notes promise steady income, often by subtly selling options in the background. The complexity isn't a bug; it's the premium feature.

Who's Buying & Why Regulation Sleeps

Ultra-high-net-worth individuals and family offices dominate the play. They chase yield in a low-rate world and seek portfolio tailoring that vanilla ETFs can't provide. Regulatory frameworks, meanwhile, often treat these instruments as private placements—keeping scrutiny light and the barrier to entry conveniently high. (A cynical take? It's the oldest play in finance: create a complex product, sell it to those who believe they're smart enough to understand it, and collect the structuring fee.)

The Ripple Effect & The Hidden Cost

This boom fuels bank profitability in their markets divisions and shifts liquidity in underlying stocks. But it concentrates risk in the hands of those presumed to handle it—a presumption sometimes tested during volatility spikes. The real cost isn't in the fees; it's in the illusion of control over forces that remain fundamentally unpredictable.

So, a quarter-trillion dollars seeks sophistication in Asia's markets. It's a testament to financial ingenuity and insatiable demand for edge. Just remember, in finance, complexity rarely translates to a free lunch—it usually just means a more expensive menu.

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.”

Sign up to Bybit and start trading with $30,050 in welcome gifts