The coronacrisis is also affecting the business of Leonteq: the derivates specialist has pulled its forecast for the full year and expects a period of persistent uncertainty.

Leonteq, a Swiss maker of derivative products with a strong foothold in Asia, has had a strong start to the year 2020, with a high level of client activity and a positive trading result on the back of increased volatility towards the end of February.

With the global spread of the Covid-19 disease in March and the oil price drop, a period of exceptionally high volatility and turbulence on capital markets began. It affected all asset classes underlying structured products, Leonteq said in a statement on Thursday. In addition, Leonteq recorded a notable increase in hedging-related costs as market risk exposures changed rapidly in an increasingly illiquid hedging market.

Outlook Withdrawn

As a result, Leonteq currently expects first-half 2020 profits to come in around break-even level. In February, Leonteq had presented a forecast for full-year operating profit of 270 to 300 million Swiss francs ($278 to 309 million).

Given the current uncertainty, Leonteq is currently not in a position to provide a financial outlook for the full year and is withdrawing its previously communicated 2020 guidance. Leonteq will publish its half-year results on July 23, 2020.

A Stress Test for Leonteq

«The Covid-19 situation has created a real stress test for global financial markets, and Leonteq has navigated solidly through this unprecedented turmoil,» said Lukas Ruflin, CEO of Leonteq. «Given the ongoing uncertainties, we will focus on protecting Leonteq’s profitability and exercise strict cost management.»

On a strategic level, Leonteq has made further progress with its key initiatives in the year to date and continues to drive its business transformation forward, especially the Smart Hedging Issuance Platform (SHIP). Leonteq’s new digital marketplace LynQs has also been further developed and new features for its lifecycle management module have been integrated to enhance user experience.

New Agreement Signed

Furthermore, Leonteq has recently signed a cooperation agreement with a new white-labeling partner, details of which will be announced in the course of this month.