Offering 5x Leverage for Long and Short Exposure to US Equity Indices
SINGAPORE: On March 4, 2022, Societe Generale launched four new Daily Leverage Certificates (DLCs) in Singapore, providing exposure to US equity indices, starting with the S&P 500 index. These DLCs offer investors the choice of 5x long or 5x short leverage on the daily performance of the S&P 500, tracked on a close-to-close basis.
Traded during Singapore Exchange (SGX) market hours, from 9 a.m. to 5 p.m., these DLCs allow investors to trade in Singapore dollars via their regular securities brokerage accounts. The price movements of these DLCs are linked to the performance of the e-mini S&P 500 futures, which trade during Asian market hours.
The e-mini S&P 500 futures are electronically traded contracts on the Chicago Mercantile Exchange, designed to track the S&P 500 index, encompassing 500 of the largest US companies and representing approximately 80% of available market capitalisation. This makes it a key gauge of the US economy.
Michael Syn, head of equities at SGX, highlighted that this is the first DLC in Asia to provide both long and short exposure to the US market during Asian trading hours. Societe Generale, which introduced its first DLC in Asia in 2017, now offers around 250 DLCs covering indices in Singapore, Hong Kong, and individual stocks, with over S$10 billion in transactions.
These leveraged products carry significant risk and are suitable only for qualified investors who are familiar with the complexities involved. For instance, a 1% change in the S&P 500 index results in a 5% movement in the value of a 5x DLC, magnifying both gains and losses.
