In 2013, Société Générale aptly observed, and promptly took advantage of, two major issues looming over the heads of Asia’s high net worth individuals (HNWI): equity downside protection and interest rate hedging.Despite an early rally in many global markets, concerns over the lack of macroeconomic fundamentals to support equity prices began increasing volatility, especially on the Hang Seng Index. Private clients were either sidelining cash for a better day or looking to with hedge downside for those already in the market.
Whilst investors may have already adapted various collar option strategies for upside participation and downside protection, Société Générale furthered the index-linked structured product to enhance returns. By systematically selling shorter-term calls that are marginally out of the money, rather than holding long-term options with greater correlation to market trends, the product was able to maximise upside participation while exploiting greater volatility for greater premiums to finance the put.
Also, with investors closely monitoring when the US Federal Reserve will begin tapering its asset-purchase program, Société Générale capitalised on the opportunity to offer products linked to proprietary indices tracking various bond markets of different maturities and currencies. Aware of clients’ scepticism towards proprietary indices, Société Générale mandates Standard & Poor’s to be its independent calculation agent.
“Our distributors screen proprietary indices especially carefully and it is not enough to have innovation and checks and balances alone,” says Edward Lee, Société Générale’s Head of Private Bank Sales (Hong Kong & Singapore), Cross Asset Solutions. “Having a solid track record is a significant game-changer when offering such products.”
With single to multi-asset class proprietary indices and timely product pitches based on a deep understanding of the region’s preferences, Société Générale has emerged as the deserving winner of the 2013 Most Innovative Provider of Index-linked Structured Products.