Leverage Certificate on SX5E Dividend Future Dec

Leverage Certificate on
SX5E Dividend Future Dec 2014
Various Leverage (SSPA cat. 199)
Zurich, June 2009
Leverage Certificate on SX5E Dividend Future Dec 2014
Investment Case
ƒ Financial crisis weighs heavily on corporate’s income statements.
ƒ Dwindling profits force enterprises to cut or suspend dividend payments.
ƒ Balance sheet restructuring (recapitalisation etc.) will continue next year.
HOWEVER:
ƒ Recent macro data indicates economic stabilisation.
ƒ Moment of economic upswing unknown yet, but certain to take place.
)
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Dividend futures imply no improvement of economic conditions during the next
five years. Therefore, entry point appears appealing.
Leverage Certificate on SX5E Dividend Future Dec 2014
Definition of Underlying
Eurex launched dividend futures on the DJ Euro Stoxx 50® last year. Previously, one
could trade dividends only via swaps in the OTC market. Now, this asset class is also
accessible for retail clients.
ƒ By purchasing a future contract, the investor gains the right on the cumulative gross
dividend of the DJ Euro Stoxx 50® in 2014.
ƒ Value of underlying at maturity does not depend on any market opinion, but can be
defined accurately.
ƒ Index contains companies that pay high dividends from a diverse range of industries
such as energy, utilities, telecoms, industrials and financials.
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Leverage Certificate on SX5E Dividend Future Dec 2014
Price History Underlying
Market expects dividends 2014 below long-term average
180 €
160 €
140 €
120 €
100 €
80 €
60 €
40 €
20 €
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98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
E
20
10
E
20
11
E
20
12
E
20
13
E
20
14
E
0€
Dividends in Euro
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Ø Dividends from 1998 to 2008
Leverage Certificate on SX5E Dividend Future Dec 2014
Benefits & Risks
Benefits
ƒ Product does not contain any options and therefore reacts promptly to price changes of the
underlying in the secondary market.
ƒ Survivorship bias: companies with shrinking capitalisation will be excluded from the index
over time and replaced by higher capitalised stocks (adjustments made by index sponsor).
ƒ When capital markets calm down it is likely that companies will increase the payout ratios,
even with stagnating profits.
ƒ Higher dividend yields when interest rates rise (inflation scenario).
Risks
ƒ If there is a deep economic depression, the product bears a substantial downside potential
(stop loss limit at 30%).
ƒ Secondary market spread will be larger (up to 4%) compared to other products due to the
underlying and leverage.
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Leverage Certificate on SX5E Dividend Future Dec 2014
Summary
The product suits investors who…
ƒ expect an economic recovery within the next few
years.
ƒ assume that companies will be able to increase
dividend payments after balance sheet restructuring.
ƒ show high risk tolerance.
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Leverage Certificate on SX5E Dividend Future Dec 2014
Product Data
ƒ Underlying: SX5E Dividend Future Dec 2014
ƒ Issue Price: EUR 102.-ƒ Leverage at Issue Date: 2x
ƒ Stop Loss Limit: EUR 30.-ƒ Maturity: 5.5 years
ƒ Valor: 10.249.969
Symbol: JFESL
ƒ Listing on the SIX Swiss Exchange
ƒ SSPA Category: Various Leverage (199)
ƒ In Subscription until 25th July 2009
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Contact
Equity Derivatives Sales
+41 58 888 81 81
Internet
derivatives.juliusbaer.com
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Disclaimer
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