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The fund will be on offer until September 24, and Ng says SG will not take on any further subscriptions after that.
The China All Weather Fund is essentially a fund of guaranteed notes linked to the volatility of the Hang Seng China Enterprises Index. The fund pays a guaranteed coupon of 1.5% of the offer price, and provides investors with a potential upside of quarterly index movements in absolute returns, which SG will pay at a maximum of 17%.
ChinaÆs volatility has been historically the highest against other emerging countries, says Ng, which is why SG chose the country as its first destination to test the idea of a guaranteed volatility capture. If the market responds well to the current launch, SG will likely extend the product to other emerging Asian countries, Ng says.
When compared to other Bric countries, the volatility of the Hang Seng China Enterprise Index was the highest at 40.99% over the course of the year between August 2007 and July 2008. In India, the Bombay Stock Exchange Sensitive Index had a volatility of 37.33% over the same period, while BrazilÆs Bovespa Stock Index was at 28.21% and RussiaÆs Trading System Index was at 24.32%.
Ng anticipates that China's volatility will extend over the foreseeable future, as corporate earnings are challenged by economic tightening measures and the global inflationary environment, which he says will create uncertainty in the equity markets.
The fund has an investment timeframe of two years; investors realising investments before the maturity date could be subject to fluctuations in the fundÆs net asset value, which according to Ng, could also be based on the performance of the euro medium-term note which the fund invests in.
In Hong Kong, SG has lined up 16 distributors for the launch and is hoping to raise $50 million û a much lower mark because theme-based investments are past their boom and SG is adapting to the relatively weak overall market appetite, Ng says.
Separately, Ng says the product is awaiting regulatory approval in Macau and Singapore and could be offered in those markets very soon.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.