Banks launch KOSPI 200-linked deposits amid market rally

South Korean banks are actively introducing new 'index-linked deposits' (ELDs) as the stock market experiences a bullish trend. These financial products aim to provide investors with principal protection while offering the potential for enhanced returns linked to the performance of the KOSPI 200 index.

KB Kookmin Bank recently launched its 'KB Star Index-Linked Deposit 26-4,' a one-year product based on the KOSPI 200. It offers various structures, including a principal-protected option with a guaranteed minimum interest rate and high-return pursuit options. For instance, a high-return structure could yield up to 10.75% annually, but the return is capped at 2.00% if the KOSPI 200 exceeds a 25% gain from the base index.

Similarly, IBK Industrial Bank has released its 'IBK Index-Linked Deposit (ELD) 26-1st' series, available in one-year and six-month terms, also pegged to the KOSPI 200. The six-month 'Stable Growth Capped' option provides returns between 0.5% and 6.3% if the index rises by up to 20%. The one-year version offers returns of 1.5% to 6.0% for gains up to 30%, with returns fixed at 0.5% and 2.5% respectively if the index surpasses these predetermined growth thresholds.

These offerings cater to investors seeking to capitalize on potential stock market gains while mitigating downside risk. The products are available for a limited period, with KB Kookmin Bank accepting subscriptions until April 8 and IBK Industrial Bank until April 9, reflecting a strategic push by banks to attract deposits during favorable market conditions.