Thursday, 7 October 2021 Reading time : 1 minute

Unrest
In recent weeks, the financial markets have been anything but calm; inflation concerns, speculation about Evergrande's bankruptcy, the threat of a U.S. default and possible profit-taking by investors have pushed volatility up. Risk-averse investors can benefit from the increase - higher volatility leads to higher option premiums and thus more attractive terms for barrier reverse convertibles.

Stable large caps
But there is another way. Increasing uncertainty in the markets creates a need for lower risk among many investors; in yield enhancement products, this can be achieved with defensive barriers, especially with large caps as underlyings.

A relatively low correlation among the underlyings and diversification across countries and sectors nevertheless allow interesting parameters for BRC.

Selection
Nestlé, the largest Swiss company by market capitalization and thus the most heavily weighted stock in the SMI, currently shows an implied volatility (6 months, call) of 15.2; the SMI index as benchmark is above 16. ZKB Equity Research continues to attribute upside potential to the stock and rates it "overweight".

In Germany, the software specialist SAP takes first place in terms of market capitalization ("overweight"), in France it is the luxury goods producer LVMH ("market weight").

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Callable BRC on Nestlé, SAP and LVMH (CHF/EUR)

• 9%* Coupon p.a.
• 65%* Barrier
• 12 months Term
• Subscription deadline October 7, 2021
• Termsheet EUR
• Termsheet CHF

*indicative

 

Disclaimer
This communication is for marketing purposes. It is neither an offer nor an invitation to submit an offer, to purchase or to subscribe to securities and does not constitute investment advice. You should consult your advisors before making an investment decision.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, financial condition, development or performance of the issuer to be materially different from any future results, financial condition, development or performance expressed or implied by such statements.
The present document has not been drawn up by the research department as defined in the rules of the “Directives on the Independence of Financial Research” published by the Swiss Bankers Association, hence these rules do not apply to this document.
If securities are mentioned in the communication, the base prospectus, the final terms and any key information document may be obtained free of charge from Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, VRIS, and from www.zkb.ch/finanzinformationen.