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A proliferation of systematic indices that track individual equity risk premia is driving some structuring desks to take a more granular approach as they aim to deliver investment styles in purer form and attract interest from investors with a solely regional mandate.
International corporates are hedging their Chinese exposures for as long as a decade through the rapidly developing offshore renminbi market to protect earnings and investments. Increased hedging, including the increase in duration of hedges where five years had been considered long, is driven by a backdrop of looser monetary policy and a potential devaluation of the currency.
Credit default swaps referencing gold mining firms have come under intense pressure compared with their underlying bonds as investors run for cover amid plunging commodity prices and a new five-year low for spot gold prices.