To back a China-related investment strategy a few months after a 2015 Shanghai Composite fiasco and a 2016 circuit breaker trigger is not only bold, but forward-thinking. In a short-termist, deal-by-deal environment like investment banking, it is rare to find a bank willing to commit to innovations that may not yield immediate returns.
Gatekeepers at Asia’s private banks recognised the progressive thinking of BNP Paribas and its contributions to the launch of the market’s first-ever index which acts as a proxy for access to China’s new economy. The S&P New China Sectors Index, backed by research from BNP Paribas Equity Derivatives Strategy (EDS) Asia, focuses on Chinese sectors set to benefit from consumption-led growth, such as consumer discretionary or insurance, while excluding old, capital-driven sectors.
“Our key focus though is to bring investment stories based on medium to long-term structural trends – like the growing New China economy – and after some extensive and thorough research, we worked together with S&P in order to establish the New China Index,” says Krisztina Anspach, head of cross-asset solutions, wealth management and family offices, global markets, APAC at BNP Paribas.
Proving the relevance of the index, Asia’s private banks requested that it be converted into an investable ETF, rather than just the Delta One notes investors had been utilising. As a result, BNP Paribas is now actively engaging a leading issuer to launch one.
And the French lender is not quite done with delivering innovative indices to the market.
“As one of the pioneers in quant strategies, BNP Paribas is actively exploring alternative solutions to generate absolute returns with fewer directional plays, a trend that is already picking up pace amongst wealth managers in Asia,” Anspach shares. The industry has spoken, choosing BNP Paribas as its Most Innovative Provider of Index-linked Structured Products.