HONG KONG, CHINA - A type of financial derivatives blamed for destroying Asian wealth is back.

Stock accumulators - dubbed 'I kill you later' - generated controversy last year after wiping out enormous sums among high net worth individuals in Asia, said the Wall Street Journal.

Now, bankers say private wealth managers at Citigroup, UBS, HSBC and other firms are back to selling accumulators to rich clients, the paper reported yesterday. The return of the accumulator shows how rapidly the appetite for risk has recovered as investors bet that the worst of the downturn is over, said the paper.

Also driving their demand are surging stock prices in Asia, the Journal added. Since hitting lows for the year in early March, Hong Kong's Hang Seng Index has climbed 77 per cent, while key indexes in South Korea and Singapore have risen 58 per cent and 81 per cent, respectively.

Initially created by investment banks for corporate clients in Europe who wanted to build up equity positions in other firms, accumulators were then marketed to private banks and their wealthy clients in over-the-counter transactions that were not disclosed to regulators.

Accumulators oblige investors to buy shares at a fixed price - usually a discount to prevailing market rates - at regular intervals, explained the Journal. If the stock's market price continues to gain, investors can pocket a hefty return. The contracts usually include a kick-out feature that causes the contract to expire if shares rise above a certain level.

But the potential for easy money carries big risk: Losses when share prices fall are unlimited for the duration of the contract, noted the paper.

A spokesman for the Monetary Authority of Singapore told the Journal it 'has received a few queries on stock accumulators from investors'.

But bankers say recent sales of accumulators still lag those in the boom years of 2006 and 2007. They estimate contracts worth about US$5 billion (S$7.2 billion) are outstanding in Hong Kong so far this year, said the Journal. This compares to April last year when Hong Kong regulators estimated US$23 billion in accumulators were outstanding, added the paper.

Banks have been accused of improperly selling accumulators as a 'special bargain' offered exclusively to high net worth customers, and the products have been the subject of legal and regulatory disputes, noted the Journal.

Bankers say the products being sold today are an improved accumulator, but the new features only limit the damage should stock prices slide, said the Journal. The product's duration has been cut to three to six months in many cases, compared to one year previously.

The Hong Kong Monetary Authority has said it prefers to maintain 'freedom of choice' of investment products but is reviewing ways to beef up investor protections, said the Journal.

Mr Martin Wheatley, chief executive of the Securities and Futures Commission, Hong Kong's stock market regulator, said he hopes investors will make sure they understand the risks of accumulators 'and are prepared to lose whatever losses will come'.

This article was first published in The Straits Times.