HSBC has rolled out a structured note product with a luxury consumption theme to its wealthy Hong Kong and Malaysian clients.
The structured product is linked to the Solactive Luxury Dynamic Factors Index, which includes global stocks that have high exposures to the luxury consumption sector.
“The Luxury index sits within our theme of stocks benefiting from Asian discretionary spending,” said Justin Chan, head of Greater China of global markets for Asia-Pacific at HSBC.
The index includes securities in industries and services such distilleries, golf courses, country clubs, jewellery and gems production, leather, handbags and luggage goods, luxury hotels and resorts, according to the Solactive website.
The final composition comprises the 20 highest ranked securities according to factors such as quality, momentum and a value filter, and the index is rebalanced quarterly.
Top holdings in the index are mainly European brands, and include Hermes, L’Oreal, Ferrari and LVMH Moet Hennessy Louis Vuitton, according to the index factsheet.
The bank’s research estimates that the luxury goods market in mainland China is likely to achieve 48% growth in 2021, doubling its overall share of the global luxury market in 2020, with further growth expected through to 2025.
Capital protection
The Luxury index is designed using smart beta, or factor, investing, based on a rules-based approach focused on persistent sources of returns in the equity market, according to the statement.
It is calculated and administrated by Solactive AG, the third-party index administrator. HSBC is the global exclusive licensor of the index and its performance can be tracked on the Solactive website.
The euro-denominated index has generated a cumulative return of 369% since inception on 20 April 2007, according to the website.
The product is available to HSBC’s Jade clients in in Hong Kong and as a shariah-compliant investment for HSBC Amanah clients in Malaysia.
“The product enables investors to gain exposure to the [luxury consumer] sector, while maintaining a high level of capital protection,” said Maggie Ng, head of wealth and personal banking, Hong Kong, at HSBC.
The product has been available since last week, and has no upfront fee, an HSBC spokeswoman told our sister publication Fund Selector Asia.
It will also be available in other wealth markets later this year, she said.
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