Investors in Europe, Asia betting on US election

The trades are coming in the form of bonds whose performance is tied to a group of shares. Swiss bank Vontobel, for example, is selling structured notes linked to stocks that should perform well if Mr Trump wins, and other similar debt that would ben
The trades are coming in the form of bonds whose performance is tied to a group of shares. Swiss bank Vontobel, for example, is selling structured notes linked to stocks that should perform well if Mr Trump wins, and other similar debt that would benefit from a Clinton victory. Both Clinton and Trump notes tend to include exposure to infrastructure companies, as both candidates have promised to push for greater investment in highways, bridges and other projects.PHOTO: AGENCE FRANCE-PRESSE

Wagers in form of bonds linked to shares; 80% of clients in one firm banking on Clinton win

HONG KONG • Rich investors in Europe and Asia are betting on stocks that will rise if a particular candidate wins the US election next week, and one firm says more than 80 per cent of its customers' dollars are wagering on Mrs Hillary Clinton.

The trades are coming in the form of bonds whose performance is tied to a group of shares. Swiss bank Vontobel , for example, is selling structured notes linked to stocks that should perform well if Mr Donald Trump wins, and other similar debt that would benefit from a Clinton victory.

Mr Eric Blattmann, head of public distribution of financial products at the bank and asset manager, reported sales of at least US$10 million (S$14 million).

Leonteq, a Swiss provider of structured products, has seen "strong interest" for similar notes in Singapore, said Mr Frank Troise, head of digital distribution here.

He declined to provide sales figures, but said that more than four-fifths of the notes his firm has sold have bet on Mrs Clinton becoming the 45th President of the United States. "Investors are voting with their wallets," Mr Troise said. "The expectation is that markets will rally substantially if Clinton does win."

Demand for Clinton notes echoes what polls and betting markets are forecasting.

If an investor buys Clinton notes and Trump wins, customers will receive their money back. The notes won't provide actual market exposure until after the election, and investors are betting that the stocks in question will continue to rise in the year beginning Nov 9, the day after the election.

Both Clinton and Trump notes tend to include exposure to infrastructure companies such as Caterpillar, because both candidates have promised to push for greater investment in highways, bridges and other projects.

A Clinton win could be a boon for hospital operators such as HCA Holdings, which may benefit from continued Affordable Care Act subsidies, according to analysts from Credit Suisse.

While equity-linked notes have been most popular, investors have also bought notes tied to currencies, according to Mr Troise.

"Sentiment is that the dollar will be stronger with a Clinton win. If Trump wins, we could see a market sell-off and the Fed cutting rates which would weaken the dollar," he added.

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A version of this article appeared in the print edition of The Straits Times on November 05, 2016, with the headline 'Investors in Europe, Asia betting on US election'. Print Edition | Subscribe