Société Générale is striving to deepen penetration with institutional clients in Asia through expanded distribution of its ETFs and quant indexing products.
Risk aversion after the financial crisis of 2008 has increased demand for product transparency and liquidity, access to exchanges and provision of research and advisory services.
Timothee Bousser, head of SocGen’s global equity flow business for Asia-Pacific, confirms that the bank’s future business push will centre around non-derivative activities, given its existing strength in derivatives.
He points to research showing that 85% of derivatives trades are made at the fund management level, necessitating the need for increased relationship building with portfolio managers.
“We have always been strong in terms of macro research and quantitative research, but that is not enough if you want to open the door and get a relationship with the typical money manager,” says Bousser. “That is what we have been doing, increasing our capability to deliver content.”
Last June SocGen announced an alliance with Japaninvest Group to provide co-branded Asian equity research to institutional clients globally. SocGen’s economic and macro research compliments Japaninvest’s company coverage in Japan and increasingly in China, Hong Kong, Taiwan and Korea.
“Our partnership with Ji Asia was something that was right in terms of content, client servicing and cost,” says Bousser.
He sees exchange-traded funds as one potential door-opener. The bank's ETF product offering in the region is done via wholly owned subsidiary Lyxor Asset Management, which has just appointed Herman Chen to head ETF distribution across Asia-Pacific.
The hire comes after Joseph Ho departed Lyxor in September last year to join Credit Suisse in February as regional head of ETFs based in Hong Kong. Ho had been Lyxor’s regional head of retail sales and marketing, and as such Chen is not a direct replacement.
“[Chen’s hire] is a new way to drive the business in Asia," says Bousser. "We wanted to get someone with strong connections to the Greater China market. Marketing is one way to increase penetration and sales, but we can also go to very large asset managers and show them our capabilities in this space.
“We have always been very strong at branding, marketing and offering our product to the retail segment and private bank network, but we were missing the institutional part. With Herman, we are bringing all these pieces to our business in the region.”
Bousser notes that Asia’s ETF market remains small in relation to the US and Europe, but adds: “We see more requests for Asian ETFs and country-specific ETFs. We are the second largest provider of ETFs in Europe and this is an offering we want to bring to our institutional client base in Asia.”
SocGen has also been increasing distribution of its quant indexing product to large institutions that need to invest in Asia as well as in the US and Europe. It designs long-only, short and long-short strategies on quantitative parameters in an effort to provide alpha.
Previously Chen was director of sales for Asia ex-Japan on Blackrock’s ETF division iShares. His last day there was in mid-March. iShares was the ETF business of Barclays Global Investors, which was acquired by Blackrock in 2009.
Before Blackrock, Chen was a vice-president at ABN Amro and before that an assistant vice-president at Citibank.
A spokesperson for iShares confirmed only that Chen had left and that the firm was still searching for a replacement.