Index providers have offered investors in US and Europe access to Asian markets for a long time, and now investors in Asia are looking to invest in non-regional indexes themselves. With its global coverage, diverse range and indexes especially catered for Asian investors, Dow Jones has been more proactive than any other index provider in capitalising on this trend. Here, Structured Products recognises this achievement, as well as the company's outstanding range of Asian regional indexes.
"Asian investors also need to diversify their portfolios. Importantly, this is something that is often overlooked by investment banks and index providers," says Frankfurt-based Lars Hamich, managing director of Stoxx at Dow Jones. "We are seeing a lot of demand from Asian investors in our benchmark US and Europe indexes as well as alternative indexes." In the past 12 months interest in the Dow Jones Eurostoxx 50 index has increased to a point were it is estimated that as much as 15% of investment into the index is coming from Asian investors, Hamich adds.
Dow Jones also caters for the Asian investor looking to invest in domestic markets, particularly those looking for access to China though its seven indexes for the country (the Dow Jones China 88 index, the Dow Jones China Total Market index, the Dow Jones Shanghai index, Dow Jones Shenzhen index, Dow Jones CBN China 600 index, the Dow Jones CBN China 600 Sector Blue-Chip indexes and the Dow Jones China Offshore 50 index). These are particularly popular with distributors and investment banks based in Hong Kong and Japan, says Anthony Yeung, regional director of Asia Pacific Region for Dow Jones in Hong Kong.
The Dow Jones Asian Titans index is one of the most popular underlyings for structured products in the region. The index comprises 50 of the biggest and best-known companies in the Asia-Pacific region, including Toyota, Sony, Samsung and News Corporation. Combined with the brand appeal of Dow Jones, it makes an attractive investment option for the retail market.
Dow Jones' sharia-compliant range is arguably the most exhaustive of any global index provider. The series encompasses more than 60 indexes that are all based on a stringent, transparent methodology. Investors in Malaysia have been particularly active in investing in both Asian and Middle East-based sharia-compliant products, Hamich says.
In the Asia-Pacific region, Australian investors are also waking up to the benefits of index-linked structured products investing. "We are seeing a lot interest from Australian investors in offshore indexes and have targeted that region in the past 12 months," Hamich says. In 2006 it also released the Dow Jones Australia Select Dividend 30 index, which tracks the highest dividend-paying equities in Australia.
The various markets are at vastly different stages of development. Investors in Hong Kong, for example, have very different appetites than do those in Singapore, or indeed in the Asia-Pacific region of Australia, Hamich says. "Dow Jones can cater to more markets and investors in these markets because it has a wider range of indexes covering an array of investment strategies," Yeung says.
As a global brand, Dow Jones has an advantage in that the major investment banks operating in Asia have existing licensing agreements with Dow Jones in other regions. As a bank enters a new market with a structured product tied to a Dow Jones index it can easily transfer structured products licenses from region to region, Hamich says. This is of particular benefit to the Asian market, where new markets are emerging at a rapid rate.
The Dow Jones calculation capabilities are of course of the highest calibre. As with all of its indexes, those available in Asia are derived directly from the Dow Jones Global Indexes (DJGI) country indexes. They are therefore constructed and maintained according to the same proven methodology used to create the DJGI family, according to an unbiased and systematic set of rules.
Why Dow Jones won
Dow Jones offers Asian structured products investors the chance to participate in regional and non-regional markets with its exhaustive index range. Its Asia Titans series is one of the leading regional benchmarks and it has also licensed US and European indexes to investment banks in Asia. It has outstanding brand appeal and calculation capabilities.
The week on Risk.net, December 2–8, 2017Receive this by email