SG to offer 'mountain range' funds in Asia
SG, the securities division of French bank Société Générale, has begun rolling out its ‘mountain range’ series of capital guaranteed funds in Hong Kong, four years after they made their first appearance in the European market.
The four-year fund offers a guaranteed coupon for the first year - currently estimated to be between 5% and 8%, with the actual coupon to be set at the June 18 launch date - with locked-in coupons for the remaining maturity of the fund based on the worst performer in a basket of 15 blue-chip stocks. After the first year, investors receive a coupon of 8% if the underlying stocks remain flat, and a higher coupon if the worst performer rises. If one of the stocks falls by 50% or more, the coupon for that year will be zero, but a security trigger then kicks in, allowing the fund manager to replace this stock. Coupons in the third and fourth years are ‘locked-in’ so they cannot be lower than that of the previous year.
Another mountain range product to make its debut in the Hong Kong market is Altiplano, launched in the guise of SG’s Double Chance Guaranteed Fund last month after a month-long offer period. This fund offers a 200% return on capital over 4.5 years, or participation in the performance of a basket of 15 stocks with a 100% capital guarantee. Investors can achieve the 200% return if none of the underlying stocks falls below 62% of its initial value between November 2004 and November 2006.
Both funds have a shorter tenor than their European counterparts, a result of less stringent tax laws in Hong Kong, and Asian investors’ penchant for shorter-term investments, said Wilson Lee, senior vice-president of equity derivatives and structured products at SG in Hong Kong. “In Europe, if your investment is longer than seven years, you get a tax break. It’s a different story in Hong Kong and investors like investing for shorter periods of time,” he said.
So what of SG’s other European mountain range products – Himalaya, Kilimanjaro, and Annapurna? “We have a big range of products and structures we can use thanks to our financial engineers in Paris,” comments Nicolas Reille, senior vice-president of structured products, Asia ex-Japan, at SG in Hong Kong. “But we will try to find the ones that will be most successful in Hong Kong. We may have other products in the pipeline that are not part of this range of products.”
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
As risk of US Basel delay grows, Europe is in a bind over CVA
European Commission may postpone FRTB, but it’s hard to separate surgically from rest of framework
FRTB start dates must align globally, says European Commission
Lawmaker could trigger delay to market risk rules in Europe if US implementation drags on
Fed green lights more capital relief trades
Five US banks authorised to issue repeat credit-linked notes backed by financial guarantees
Basel III endgame: why moving fast might prove better for banks
Republicans are pushing for reproposal, but a rapid finalisation may prove less far-reaching
Isda pushes to ‘decouple’ Simm calibration from model changes
Emir 3.0 prompts effort to separate risk-weight revisions from methodology updates
Basel war on window-dressing may smooth liquidity, at a price
Changes to G-Sib charge could curb year-end repo volatility, but also cut balance sheet capacity
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Most read
- As risk of US Basel delay grows, Europe is in a bind over CVA
- US large bank CRE risks could be understated, say researchers
- T+1 shift sparks dividend chaos in HK structured products