© Reuters. FILE PHOTO: An investor watches a board showing stock information at a brokerage office in Beijing, China October 8, 2018. REUTERS/Jason Lee/File PhotoSHANGHAI - China's efforts this week to put a floor under its tumbling stock market have eased market concerns around a potential implosion of an estimated $27 billion of"Snowball" structured products and other forms of leveraged bets.
It gained popularity in 2021, as the pandemic and weak economy forced brokerages and investors to get into innovative structured products betting on market volatility. The investment bank estimated the average knock-in level for Snowball products tied to CSI500 is 4,865. The index seemed to be closing in on that level on Monday, when it hit a low of 5,269 after losses of 18% since early April. It has since rebounded.
While worries over a major liquidation of stocks triggered by Snowball may have receded, analysts say there is still danger in a lot of other structured products actively traded in China.
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