On 17 July 2019, the Singapore Exchange (SGX) will celebrate the 2nd anniversary of launching Daily Leverage Certificates (DLCs) in the market. DLCs are short-term trading products that allow investors to amplify their exposure to the market and offer both long and short positions.
Offered by Societe Generale in Singapore, the number of securities listed in the market has increased from just 10 initially to more than 76 today, covering both the Singapore and Hong Kong markets. This includes 56 single stock DLCs, such as Venture Corp, Yangzijiang Shipbuilding and Keppel in Singapore and Tencent, Geely Automobile, AIA and China Construction Band in Hong Kong, and the rest comprises indices such as the MSCI Singapore Index and Hang Seng Index (HSI).
Allowing traders to leverage their position up to 3x, 5x and 7x and offering both long and short positions, DLCs have become quite popular expanding from just 10 securities when it first listed to 76 today. This has translated to close to $5 billion in trading in the past two years.
In June 2019, SGX announced that six more securities will be added to the list (to make up the 76). They include Singapore-listed City Developments, Singapore Airlines and SGX, and Hong Kong-listed AAC Technologies, Sunny Optical and Sands China.
As usual, we will look at four of them.
City Developments Limited (SGX: C09)
Unlike the next three companies featured below, CDL is a well-known Singapore-listed company. With a market capitalisation of $9 billion, CDL is one of the largest property developers in Singapore with a network spanning 103 locations in 29 countries and regions.
Its stable of properties comprise residences, offices, hotels, serviced apartments, integrated developments and shopping malls. In addition, its London-listed subsidiary, Millennium & Copthorne Hotels is one of the largest hotel chains in the world, with over 135 hotels worldwide.
CDL is also one of the 30 largest and most liquid companies in Singapore, and is listed on the Straits Times Index (STI).
AAC Technologies (HKG: 2018)
The next three companies are listed in Hong Kong, and many investors and traders may not be as familiar with them.
With a market capitalisation of HK$51 billion, AAC Technologies offers cutting-edge technologies in materials research, simulation, algorithms, design, automation and process development in acoustics, optics, electromagnetic drives, precision mechanics, Micro Electro-Mechanical Systems, radio frequency and antenna.
Incorporation these technologies in everyday products, AAC Technologies is the world leading solutions provider for mobile devices, such as smart phones, tablets, wearables, ultrabooks, notebooks and electronic book-readers.
While the company is not listed in Singapore, its DLC product allows traders and investors in Singapore to trade the company.
Sunny Optical Technology Group (HKG: 2382)
Sunny Optical is another leading technology group listed in Hong Kong that investors in Singapore may not be very familiar with, or be able to trade. With the new DLC product, they now can.
Established in 1984, Sunny Optical is in the business designing and manufacturing optical and related products, such as glass and plastic lenses, prisms, mobile phone camera modules, microscopes, surveying instruments and other analytical instruments.
The company has four production bases in China, as well as strong research and development capabilities with R&D centres in China, Singapore, South Kore and USA.
Sunny Optical has a market capitalisation of $94 billion.
Sands China (HKG: 1928)
While Sands China may not be as available as a trading or investment, many would be familiar with its businesses – developing, owning and operating integrated resorts, retail malls and casinos, as well as convention and exhibition halls.
In essence, its business is similar to the Marina Bay Sands integrated resort in Singapore.
The company has a market capitalisation of HK$327 billion, and its properties include The Venetian Macao, The Plaza Macao, Sands Macao, Sands Cotai Central and The Parisian Macao.
Only SIP-Accredited Investors Can Trade DLCs
Now that we are able to trade some of the biggest companies listed in Hong Kong, on the DLCs, it may not be for everyone. However, there is definitely a group of investors and traders that benefit. This can be seen by the close to $5 billion turnover in the last two years.
Recognising this, only investors that are Specified Investment Product (SIP) qualified may able to trade DLCs. This means those who trade the product should be fully aware of the risks and have the required knowledge to do so responsibly.
If you want to start trading the DLCs, make sure you understand what you are trading and consult your broker if you are not sure.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.