Societe Generale is offering a one-year equity-linked note for investors who reckon that China's equity markets have turned the corner. Maybe.

This latest offering in the SG Excel Notes series promises to call early and pay an immediate 5% return if any one of the four underlying China stocks has risen by the end of the note's first quarter. Investors might not have liked that bet as recently as a month ago but some Hong Kong punters are now sensing the market turning a corner.

Even so, this type of structure is still considerably more conservative than the super-charged notes on offer before the markets turned south. So-called best-of structures give investors multiple chances to get paid, as opposed to the worst-of baskets that were more popular during the bull market.

With SG's note, the best-performing stock drops out of the basket at the end of each quarter if none of the remaining stocks are above their starting price. That means only one stock will remain in the final quarter, but investors will still get paid their 20% at maturity even if that last stock has not risen û so long as it has stayed at or above 83% of its starting price.

If the last stock has fallen more than that, investors take delivery of the shares instead of getting their cash back û and they buy them at the strike price of 83, so their losses depend on how far below that level the stock has fallen.

Obviously, that is a worst-case outcome. Investors will be attracted to the product because it offers a reasonably good chance of paying out, albeit with a less-exciting coupon than what they were used to last year. Andrew Au at SG says that this kind of structure is a halfway house between the bull market products of 2007 and a capital guaranteed product, which Hong Kong investors are still too bullish to embrace.

The basket also offers investors a good degree of diversification across sectors, says Au. It comprises two financials plus an oil and an infrastructure company: CNOOC, China Communications Construction, China Life and China Merchants Bank.

Looking back at how the note would have performed in the past supports the idea that now may be a good time to buy into this type of structure. A note that launched on February 1 would have comfortably paid out by the end of the first quarter, i.e. yesterday, with three of the four stocks well above their starting prices and only China Communications Construction languishing.

Notes starting earlier than that would not have paid out yet. An October start would have just scraped through, with China Communications Construction, but any notes launching at the start of the months between October and February would still be waiting to pay and only the January basket would include any stocks trading above the 100% strike level.

The notes are on offer in Hong Kong until May 8 and have a minimum investment amount of HK$30,000.