Responsible investing includes allocating to poor-ESG performing EM countries and helping them shift to greener solutions, instead of divesting completely, experts said.
Based in Hong Kong, Dechy is responsible for developing new and existing hedge fund relationships, and allowing these clients to benefit from the wide range of market products and services offered by Societe Generale Corporate and Investment Banking (SGCIB).
This newly created position reflects the growing importance of hedge funds as a strategic business for SGCIB. Societe Generale services over 400 hedge funds worldwide, and more than 50 in Asia-Pacific.
ôThis is a key business for us. We are really pushing towards that direction. Our key strength is in New York and London, and in Asia we are at an infancy stage,ö Dechy says.
Dechy has seven years experience in the hedge fund business. Most recently, he worked at global brokerage services firm Newedge (formerly known as Fimat), where he participated in the development of the prime brokerage platform for hedge funds and commodity trading advisors in London, before being appointed head of business and product development in 2005 for Asia-Pacific. Newedge is a jointly owned subsidiary of Societe Generale and Calyon (Fimat was 100% owned by Societe Generale).
The growing demand for alternative products is the biggest opportunity for Dechy as he steps into his new role at Societe Generale. There are around 1,000 hedge funds in Asia-Pacific with total assets under management of around $200 billion, which is a small but growing community.
ôThat represents massive potential for growth that SocGen wants to tap. The opportunities are clear. If you look at the client base, itÆs enormous. There are so many hedge funds out there and it is such an evolving environment,ö Dechy says.
ôWe want to get to know these hedge funds while they are small and watch them grow. The trend that we expect to see is an increase in the average size of hedge funds in Asia-Pacific because of the increase in liquidity in the market, which will result in less capacity issues,ö he adds.
Societe Generale has a hedge fund relations team of six in New York focusing on US hedge funds, five in London focusing on European hedge funds, and two in Hong Kong focusing on Asia. Chantara Sim, who will be moving to Hong Kong from Soceiete GeneraleÆs London office, will be the second member of DechyÆs team. He expects to have another two people join his team next year.
The strength of Societe Generale has been in the derivatives market, and this has been a key element of its growth in the hedge fund business.
ôThe derivatives business has grown so much here in Asia,ö Dechy says. ôIf you look at the listed options in Korea, the OTC business in Japan, the Nikkei index options, these are examples of areas that have been expanding over the past five years. We at SocGen have recognised this growth and have decided to put a focus on it.ö
Dechy notes that Societe Generale has key relations with a number of hedge funds worldwide in terms of banking services or offering services directly to hedge funds such as OTC derivatives, equities, financing leverage, custody and clearing. It also has relations with hedge funds in the form of investments through the various assets management arms of Societe General, whether it is Lyxor Asset Management, Societe Generale Asset Management, or SG Private Bank. Through these asset management arms, the bank can provide several avenues for its clients to potentially invest in these hedge funds.
ôWhat we want to achieve is to offer a global integrated service to our hedge fund clients,ö Dechy says.
The key core service Dechy plans to push and expand in the short-term is equity derivatives, which makes sense given the bankÆs strength in that area.
ôYou canÆt find any that will match our capability in terms of access, ideas, volatility trade,ö he says. ôAt SocGen, we do a lot of structuring through warrants, we are a market maker, and we have a lot of flow and therefore we can transfer that risk to our hedge funds at a price that is appealing to our clients. Hedge funds want the best price, they donÆt want anything off the shelf.ö
One of the key challenges Dechy expects to face is introducing equity derivatives to hedge funds that have a long/short equities strategy û the type that makes up the bulk of funds in Asia.
ôThese long/short hedge funds performed well especially from exposure to China and India. But now markets are much more difficult,ö he says. ôWe are spending time explaining derivatives and how they can use derivatives to protect against market movements on a daily basis. The main challenge for us is educating hedge funds about the derivatives that we can engineer.ö
Dechy reports to global heads of hedge fund relations Paul Wiltshire, based in London, and Pascal Vallot, based in New York. Locally, he reports to De Doan Tran, head of SGCIB Asia-Pacific.
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