Introduced to the Singapore Exchange in July 2017, Daily Leverage Certificates (DLCs) are not stocks but rather, an instrument that offers investors fixed daily leveraged exposure to a number of leading Asian indices. Previously, DLCs were offered at three times (3x) and five times (5x) fixed daily leverage.
#1 7x Leveraged DLCs
DLCs of seven times (7x) leverage will be issued by Societe Generale. Trading of these new DLCs will commence on 24 January 2018. Both the 3x and 5x DLCs will continue to be available.
The 7x DLCs work in the exact same way as the 3x and 5x DLCs, except that it offers investors a seven times intraday exposure on the movement in the underlying index that investors are vested into. Similar to the 3x and 5x DLCs, investors can take on both long and short positions in the indexes.
Investors would be able to trade the MSCI Singapore Index, Hang Seng Index and the Hang Seng China Enterprise Index. We will briefly explain each of these indexes.
#2 MSCI Singapore Index (SiMSCI)
Similar to the Straits Times Index, the SiMSCI is an index designed by MSCI (a research company from the U.S.) and meant to track the performance of large and mid-cap companies in Singapore. With 27 constituents, including the likes of DBS, OCBC, UOB and SingTel, the SiMSCI covers approximately 85% of the free-float adjusted market capitalization of Singapore stocks.
For the year of 2017, the gross return for the SiMSCI was approximately 25%.
Investors in Singapore can get daily exposure to the SiMSCI using either the 5x DLCs or the 7x DLCs on the Singapore Exchange.
#3 Hang Seng Index (HSI)
Launched in November 1969, the HSI is the most popular index in Hong Kong and is often the main indicator used as a reference to how well the Hong Kong stock market is performing.
The constituents in the HSI are grouped into four main segments; Finance (e.g. HSBC, ICBC, AIA, Bank of China); Utilities (e.g. CLP Holdings, HK & China Gas); Properties (e.g. Wharf Holdings, Henderson Land) and Commerce & Industry (e.g. CKH Holdings, Swire Pacific A, Tencent). In total, there are 51 constituents.
For 2017, the returns for the HSI was approximately 35%.
Investors in Singapore can get daily exposure to the HSI using either the 3x, 5x or 7x DLCs on the Singapore Exchange.
#4 Hang Seng China Enterprise Index (HSCEI)
Also based in Hong Kong, the HSCEI is an index that tracks the performance of major China enterprises that are listed in the Hong Kong stock market. It’s often used as a reference to how well China companies are performing in Hong Kong.
The HSCEI includes the likes of CCB, ICBC, Bank of China, Ping An and China Life, with most companies coming from the Financial, Energy, Property and Consumer Goods sector.
For 2017, the HSCEI delivered a return of about 25%.
Investors in Singapore can get daily exposure of the HSI using either the 3x, 5x or 7x DLCs on the Singapore Exchange.
You can find out more about the DLCs on the Societe Generale website.
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