Equity Blue

It has been a lot written here on the topic of bonus certificates; their various parameters and functionalities were described, and a few real life examples were shown. Let’s suppose we know and understand the basic fundamentals of these instruments, and therefore let’s have a look further on how to choose and compare bonus certificates. For the purposes of this article we will compare two real bonus certificates. By looking at these two certificates it does not definitely mean that I would recommend buying any of them. They have been rather chosen for the purpose of a real case. Each and every investor must do its own selection of the right instrument according to his risk appetite, expected yield, and knowledge and experience. Both compared certificates are classical bonus certificates, which offer yield in case of a growth, stagnation, or moderate decrease of the value of the underlying asset. The comparison can be, nevertheless, appropriately applied to other types of certific...

Weekly price performance of the Cap Bonus Certificate from 17.03. until 24.03.2016; Source: Boerse Stuttgart In the twelfth week that was shorter because of the Easter holiday, our exemplary Cap Bonus Certificate on Index EURO STOXX 50 with the ISIN DE000GT6YD37 got slightly weaker. While on Friday, March 18, it closed at EUR 86.44, on the last trading day of the twelfth week it finished trading at a price of EUR 85.48, i.e. by 1.1 % lower. The decrease of the certificate’s price was caused by the falling value of the index EURO STOXX 50, which finished trading at 2986.73 points on Thursday, March 24. The distance between the actual value of the index and the safety barrier is currently 25 %. At the price of EUR 85.48 the certificate offers a yield of slightly more than 4 %, which is approximately 17.8 % if calculated on annual basis. Closing Values of the Index EURO STOXX 50 04.01-24.03.2016 Trading in the twelfth week was a lot influenced by the attacks that happ...

Closing values of the index  EURO STOXX 50; from 04.01.2016 till 18.03.2016  The events in the eleventh week were mainly driven by the meeting of the US Federal Reserves. Markets were expecting further heading of the monetary policy, especially the speed of increasing interest rates. The results of the Wednesday, March 16 meeting confirmed that Fed would not hurry with interest rate increases. This news first brought optimism to the markets. Especially for the US markets the eleventh week was marked by an uninterrupted growth. For the European markets the news on increases of interest rates on a slower pace brought positive reactions too, but a subsequent sharp strengthening of euro against the dollar caused European equities to turn downwards. This was visible especially on Thursday, March 17. Weekly price graph of Cap  Bonus Certificate on Index EURO  STOXX 50; Source: Bourse Stuttgart The index EURO STOXX 50 weakened by approximately 0.5 % ...

The tenth week was as expected very interesting in the capital markets. Undoubtedly the biggest portion of expectations was devoted to Thursday, March 10, when the European Central Bank (“ECB”) held its meeting on further monetary policy steps. The markets were expecting how ECB would decide about the interest rates and how would change its attitude towards further quantitative easing. Graph of closing values of the  Index EURO  STOXX 50;  04.01.-11.03.2016   ECB decided to decrease the key interest rate by further 0.1 % below zero, and thus reaching -0.4 %. This step was widely expected by the markets. A surprise for markets was the decision to increase the monthly volume of purchased assets by additional 20 billion EUR, i.e. by 10 billion EUR more than the markets first expected. The news caused immediately a truly euphoric rally. Values of the key European stock indexes grew by more than 3 %. Later in the afternoon, however, the head of the ECB releas...

The ninth week of this year was marked by optimism on the capital markets. The Western European stocks measured by the stock index EURO STOXX 50 experienced price growth in four days out of five. The closing values of the index returned above the magic value of 3000 points after one month, and for the majority of the week they remained there. On the graph below the ninth’s week development is divided by the black vertical line. The value of the index grew by 3.7 % during the week. How did the positive market development influence the exemplary bonus certificates? Price development of the Index EURO STOXX 50 from 04.01.2016 till 04.03.2016 Rally of the Cap Bonus Certificate The Cap Bonus Certificate on Index EURO STOXX 50 with the ISIN DE000GT6YD37 closed trading at a price of EUR 85.28 on Friday, March 4, which was by 5.7 % higher than last Friday, February 26. The value of the certificate thus grew closer to the maximum possible yield, which is EUR 89. In the graph it...

In the last week of February the stock index EURO STOXX 50 experienced again a rather strong price oscillation. The index was at its low in the middle of the week. The week’s difference between the highest and the lowest value of the index was at least 120 points, which is roughly 4 % (see the graph nr. 1). The index’s value oscillation has, of course, influenced the price development of our exemplary certificates. While the beginning and the end of the week were particularly favorable for the certificate focusing on growth of the value of the index, the mid of the week was very interesting for the reverse certificate. Graph Nr. 1: Price development of the stock index  EURO STOXX 50 from 04.01.2016 until 26.02.2016 The Cap Bonus Certificate on Index EURO STOXX 50 with the ISIN DE000GT6YD37 was closing at the price of EUR 80.65 on February 26, which is 3.5 % higher than on Friday, February 19. The price development of the certificate can be best described by viewing t...

Similarly as in January, significant market volatility has continued to be present in the capital markets in February too. One of the broadly used indicators of market volatility is the VIX Index, which is measuring the price oscillation of the American stock index S&P 500. A brief view of the graph below, which shows the curve of the VIX index for the recent twelve months, suggests that the market volatility tends to be growing from November 2015, i.e. the curve creates bigger slopes, while it’s more flat during low volatility periods. How does the increased volatility of recent weeks influence prices of certificates? Graph Nr. 1: Index VIX In the previous article the first exemplary Cap Bonus Certificate on index EURO STOXX 50 with the ISIN DE000GT6YD37 was shown. Let’s have a look how the value of this certificate evolved for the last two weeks. As it was already mentioned in many of the previous articles, the price of a certificate derives mainly from the evolution of...