SOCIETE GENERALE LAUNCHES THE FIRST DAILY LEVERAGE CERTIFICATES IN ASIA Fixed Leverage of up to 7 times on key Asian indices

Transcription

1 JANUARY 2018 SOLUTIONS IN GLOBAL MARKETS CROSS ASSET INVESTING HEDGING FINANCING SOCIETE GENERALE LAUNCHES THE FIRST DAILY LEVERAGE CERTIFICATES IN ASIA Fixed Leverage of up to 7 times on key Asian indices For Specified Investment Products (SIP) qualified investors only Exchange Partner

2 DISCLAIMER BY SGX This document/presentation has not been prepared by Singapore Exchange Limited ( SGX ) or any of its affiliates (SGX and its affiliates collectively, the SGX Group Companies ) and the information in this document/presentation has not been verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the contents of this document/presentation. Accordingly, no representation or warranty whatsoever, expressed or implied, including without limitation any statement, figures, opinion or view provided herein is given by any SGX Group Company and it should not be relied upon as such. No SGX Group Company shall be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, or use of or any reliance on any information, in, arising from or in connection with this document/presentation and/or the seminar. Statements or information disseminated by presenters at the seminar represent the views of the particular presenter and not of any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties, including any content of information at the seminar. Use of and/or reliance on such information is entirely at the reader s and/or audience s own risk. 1

3 CONTENTS INTRODUCTION TO SOCIETE GENERALE DAILY LEVERAGE CERTIFICATES (DLC) A CLOSER LOOK AT DLC WHERE TO FIND DLC INFORMATION dlc.socgen.com

4 INTRODUCTION TO SOCIETE GENERALE Expert in Listed Products

5 EXPERTISE IN LISTED PRODUCTS One of the world s largest issuers of Listed Products Societe Generale is the one of world's largest issuers of Listed Products, with more than 25 years experience in providing an outstanding trading service. Today, Societe Generale s Listed Products are actively traded by retail, professional and institutional investors on stock exchanges in France, Belgium, Spain, Italy, UK, Germany, Sweden, Finland, Netherlands and Hong Kong. RETAIL PROFESSIONAL INSTITUTIONAL 20+ YEARS EXPERIENCE 4

6 A DRIVING FORCE IN THE LISTED PRODUCT INDUSTRY For over a quarter of a century, Societe Generale has been a driving force behind many new markets and product types: Markets 1989 France 1996 Hong Kong 1997 Spain 1998 Italy 2002 United Kingdom 2005 Singapore 2008 Japan 2013 Sweden 2015 Finland 2016 Netherlands New Products 1989 First Covered Warrants 1996 First Reverse Convertible structures 1997 First wide range of Certificates 2001 First ETF listed in France 2005 First Turbos in Sweden 2010 First Digital Options in Germany 2011 First Daily Leverage Certificates 2012 First Actively Managed ETN 2013 Launch of Daily Turbos 2015 First DLC on FX and Bond futures 2017 First DLC in Asia 5

7 DAILY LEVERAGE CERTIFICATES (DLC) Introduction

8 DLC THE RISING STAR Constant Leveraged Products, which are equivalent to Daily Leverage Certificates, have had the largest growth compared to other listed structured products in Europe since Investors are predominantly retail and hold positions for varying periods of time (from days to weeks). Average trade sizes range from approximately 10k to 50k EUR mn 40,000 30,000 Turnover of Listed Structured Products (by type) in Europe Brexit had a negative impact on turnover in ,000 10, Q1 - Q3 Capital Protected Yield Enhancement Participation Warrants: w/o KO Warrants: KO Daily Leverage Certificates Source: EUSIPA Market Report Q Q and Borsa Italiana Sedex Statistic Q Q Note: KO refer to Knock-out 7

9 DLC IN A NUTSHELL Daily Leverage Certificate Fixed daily leverage Daily long or daily short Live tradable prices throughout the day 3x / 5x / 7x daily leverage Boost your potential return, or obtain same exposure with less capital Trade on exchange like a stock Liquidity provided by Designated Market Maker (DMM) Every investor sees the same price 8

10 HOW DLCs WORK DLC Daily Performance Underlying = x - Asset Daily Leverage Performance Costs and Fees Example: 15% DLCs Daily Performance in Theory 14% Day 1 Day 2 10% Up by 2% 24,480 5% 0% 2% HSI 24,000-5% -10% *Before Costs and Fees are factored in -15% -14% HSI 7x Long DLC 7x Short DLC The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 9

11 DLCs PERFORMANCE SINCE LAUNCH 125.0% HSI Index Level v.s. HSI DLCs Price 141.1% 75.0% 71.8% 25.0% 22.2% -25.0% -53.2% -75.0% 7/14 8/11 9/8 10/6 11/3 12/1 12/ % HSI 3L HSI 5L HSI 3S HSI 5S HSI Close Price HSI 3L HSI 5L HSI 3S HSI 5S HSI 14-Jul Jan Return 22.2% 71.8% 141.1% -53.2% -72.3% *The return data of the index and the products are obtained between 14 th July 2017 to 19 th January 2018 Source: Bloomberg and as of 19th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 10

12 DLCs PERFORMANCE SINCE LAUNCH SIMSCI Index Level v.s. SIMSCI DLCs Price 70.0% 71.1% 50.0% 30.0% 10.0% 11.0% -10.0% -30.0% -50.0% 14/07/17 14/08/17 14/09/17 14/10/17 14/11/17 14/12/17 14/01/ % SIMSCI 5L MSG 5S MSG Close Price SIMSCI 5L MSG 5S MSG 14-Jul Jan Return 11.0% 71.1% -49.6% *The return data of the index and the products are obtained between 14 th July 2017 to 19 th January 2018 Source: Bloomberg and as of 19th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 11

13 DLCs PERFORMANCE SINCE LAUNCH 125.0% HSCEI Index Level v.s. HSCEI DLCs Price 121.5% 75.0% 66.5% 25.0% 22.9% -25.0% -75.0% 7/14 8/11 9/8 10/6 11/3 12/1 12/29 HSCEI 3L CEI 5L CEI 3S CEI 5S CEI -54.6% -74.7% Close Price HSCEI 3L CEI 5L CEI 3S CEI 5S CEI 14-Jul Jan Return 22.9% 66.5% 121.5% -54.6% -74.7% *The return data of the index and the products are obtained between 14 th July 2017 to 19 th January 2018 Source: Bloomberg and as of 19th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 12

14 UNDERLYING INDEX VS DLC PERFORMANCE SINCE LAUNCH Performance between launch date on 17 July 2017 to 19 Jan 2018 Underlying Index Perf (%) Leverag e Long / Short Stock Code Perf (%) Daily Leverage Effective Leverage DLC Value at Launch (SGD) DLC Value on 19 Jan 2018 (SGD) MSCI Singapore Free Index +11.0% 5X Long CIOW 71.1% Short CIXW -49.6% Hang Seng Index +22.2% 3X 5X Long CIWW +71.8% Short CIVW -53.2% Long CIUW % Short CITW -72.3% Hang Seng China Enterprises Index +22.9% 3X 5X Long CISW +66.5% Short CIRW -54.6% Long CIQW 121.5% Short CIPW -74.7% DLCs demonstrate a good tracking performance launch-to-date Compounding effects (explained in later sections) were in favor of investors for HSI and SIMSCI, and mostly in line for HSCEI Source: Bloomberg and as of 19 th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 13

15 MARKET STATISTICS (TURNOVER AND OUTSTANDING POSITIONS) Why have we introduced 7x DLCs in Singapore? Healthy retail investor demand: S$14 million of average daily turnover of the first batch of DLCs (3x and 5x), vis-à-vis the S$58 million of average daily turnover of all structured warrants traded on SGX in FY2017. Positive feedback on our market-making quality especially on our tight bid-ask spread, from traders who have been trading DLCs since the launch on July It is in the context of this positive growing investor demand for DLCs that we chose to launch the second batch of DLCs offering higher leverage and potential returns. Thousands Outstanding Positions by product 2, % Daily Turnover Distribution 2,000 1,500 1, Jul Aug Sep Oct Nov Dec 5S MSG 5L MSG 5S CEI 5L CEI 5S HSI 5L HSI 3S CEI 3L CEI 3S HSI 3L HSI 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 21.1% 36.8% 39.5% 34.1% 1.0% 8.9% 2.4% 6.8% 3.7% 5.6% 25.8% 14.3% 2017Q3 2017Q4 3L HSI 3S HSI 3L CEI 3S CEI 5L HSI *July data:17/07/ /07/2017 5S HSI 5L CEI 5S CEI 5L MSG 5S MSG Source: Societe Generale, as of 29 th December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 14

16 ARE DLCS FOR YOU? DLCs are not suitable for everyone. They may be suitable if you are: ACTIVE TRADERS SIP* QUALIFIED HIGH RISK / RETURN FULL UNDERSTANDING CAPITAL AT RISK * SIPs refer to Specified Investment Products as defined under MAS Notice on the Sale of Investment Products (SFA 04-N12). SIPs are derivatives, or products which may contain derivatives. They have complex features and risks which can expose investors to more factors which can cause a loss. The returns or losses on a product may be determined by complicated formulas that may not be easy to understand. 15

17 WHEN WOULD I USE DLCs? Long DLCs can help you: Enlarge return in rising market Maintain your investment exposure with less capital Capture short-term investment opportunities Short DLCs can help you: Obtain positive return in falling market Capture short-term investment opportunities Hedge against your portfolio to minimize your overall investment exposure 16

18 HOW TO PICK YOUR DLC Simple 3-step approach: Which Underlying Index are you looking at? HSI / HSCEI / SIMSCI? What is your view? Long or Short? Which leverage level fits with your risk appetite? 3x / 5x / 7x? 17

19 WHAT WE OFFER 16 DLCs are now available on the SGX, and are the first of their kind in Asia Based on the table below, you can use the 3-step approach to pick your DLC DLC.Socgen.Com DLC PRODUCT LIST with SGX Stock Codes Step 1 INDEX Step 2 VIEW Step 3 LEVERAGE 3x 5x 7x MSCI Singapore Free Index Hang Seng Index Hang Seng China Enterprises Index Long CIOW CPVW Short CIXW CPWW Long CIWW CIUW CPRW Short CIVW CITW CPSW Long CISW CIQW CPTW Short CIRW CIPW CPUW Search on Mobile Site Source: Societe Generale, as of 19 th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 18

20 HOW WE MAY UTILIZE DLCs UNDER RECENT MARKET MOVEMENTS In 2017 s bull run, many investors have had a positive return on their stock portfolio Source: Bloomberg, data as of 19 th Jan If they do not want to sell their stocks but are afraid of market correction, they can utilize short DLCs to hedge against their investment DLCs currently come with 3x, 5x and 7x leverage. Taking 5x leverage as example, by simply investing 20% of extra capital in 5x short DLC, investors can obtain a virtually full protection of their portfolio* 2. If they do not want to keep the stock position anymore, they can choose to sell the stocks and use part of the profit to invest in Long DLCs (3x, 5x or 7x) to maintain their investment exposure *Subject to correlation between one s portfolio and the DLC s underlying index, and compounding effect The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 19

21 THEORETICAL EXAMPLE SMA-triggered long signal HSI 10-day (yellow) SMA broke through 20-day SMA (green) on 22 nd Dec 2017 Buy 5x Long DLC (CIUW) on HSI for 10 trading days From 22 nd Dec 2017 to 10 th Jan 2018, HSI went up by 5% Intrinsic value of CIUW increased from to 5.097, up by 26% Buy Long DLC when technical indicators trigger a buy signal Source: Bloomberg, as of 19 th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 20

22 THEORETICAL EXAMPLE SMA-triggered short signal SIMSCI 10-day (green) SMA dropped below 20-day SMA (yellow) on 11 th Aug 2017 Buy 5x Short DLC (CIXW) on SIMSCI for 10 trading days to hedge against short-term market downturn From 11 th Aug to 25 th Aug, SIMSCI went down by 0.9% Intrinsic value of CIXW increased from to 2.425, up by 2.54% Buy Short DLC when technical indicators trigger a sell signal Source: Bloomberg, as of 19 th January 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 21

23 THEORETICAL EXAMPLE Simply Long Since DLC s debut in July 2017, the Asian market has been on a strong bullish run especially for Hang Seng Index By simply investing in 5x Long DLCs (CIUW) on HSI on 2 nd Jan to 16 th Jan 2018, investors would have obtained 21.08% on return, compared to 4.55% on index CIUW 127% 21.08% HSI 127% 4.55% Source: Bloomberg, as of 1 st February 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 22

24 REAL EXAMPLE INTRADAY PERFORMANCE (7X Long DLC) 7x Long DLC (CPRW) followed closely with the HSI throughout the period. Buy 7x Long DLC (CPRW) at $2.16 when HSF at 32,293 on 31 st Jan and sell at $2.48 when HSF at 32,978 on 1 st Feb. (HSF up 2.1%; CPRW up 14.8%) Source: Bloomberg, as of 1 st Feb 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 23

25 REAL EXAMPLE INTRADAY PERFORMANCE (7X Short DLC) 7x Short DLC (CPSW) followed closely with the HSI throughout the period. Buy 7x Short DLC (CPSW) at $2.75 when HSF at 32,293 on 31 st Jan and sell at $2.40 when HSF at 32,978 on 1 st Feb. (HSF up 2.1%; CPRW down 12.7%) Source: Bloomberg, as of 1 st Feb 2018 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 24

26 SG DLC LIQUIDITY PROVISION QUALITY SPREAD SIZE CONSISTENCY QUALITY LIQUIDITY Source: Bloomberg, as of 1 st November 2017, 11:55am The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 25

27 SG DLC LIQUIDITY PROVISION QUALITY STATISTICS Average Spread (No. of Ticks) 10 Average Size (No. of Units) SIZE CONSISTENTLY AT 250,000 UNITS SPREAD CONSISTENTLY CLOSE TO 1 TICK (MINIMUM SPREAD) /17 8/1 8/16 8/31 9/15 9/30 10/15 10/30 11/14 11/29 12/14 12/29 Spread Size Source: Bloomberg, as of 29 th December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 26

28 Return Return Return Return AMPLIFIED RETURNS with 7X - HSI Daily Returns (close to close) of Hang Seng Index (1x / 3x / 5x / 7x) in 2017 Actual 1x HSI Daily Return 16% 12% 8% 4% 0% -4% -8% -12% -16% Month Simulated 5x HSI Daily Return 16% 12% 8% 4% 0% -4% -8% -12% -16% Month Simulated 3x HSI Daily Return 16% 12% 8% 4% 0% -4% -8% -12% -16% Month Simulated 7x HSI Daily Return 16% 12% 8% 4% 0% -4% -8% -12% -16% Month Leverage Largest Rise Largest Fall 1x +2.25% -2.14% 3x +6.74% -6.43% 5x % % 7x % % Source: Bloomberg, as of 29 st December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 27

29 Return Return Return Return AMPLIFIED RETURNS with 7X - HSCEI Daily Returns (close to close) of Hang Seng China Enterprises Index (1x / 3x / 5x / 7x) in % Actual 1x HSCEI Daily Return 30% Simulated 3x HSCEI Daily Return 20% 20% 10% 10% 0% -10% -20% -30% Month Simulated 5x HSCEI Daily Return 30% 20% 10% 0% -10% -20% -30% Month Simulated 7x HSCEI Daily Return 30% 20% 10% Leverage Largest Rise Largest Fall 1x +3.62% -2.80% 3x % -8.41% 5x % % 7x % % 0% -10% -20% -30% Month 0% -10% -20% -30% Month Source: Bloomberg, as of 29 st December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 28

30 Return Return Return AMPLIFIED RETURNS with 7X - SIMSCI Daily Returns (close to close) of MSCI Singapore Free Index (1x / 5x / 7x) in % Actual 1x MSCI Singapore Daily Return 8% 4% 0% -4% -8% -12% Month Simulated 5x MSCI Singapore Daily Return Simulated 7x MSCI Singapore Daily Return 12% 12% Leverage Largest Rise Largest Fall 1x +1.67% -1.46% 5x +8.33% -7.32% 7x % % 8% 4% 8% 4% 0% -4% -8% -12% Month 0% -4% -8% -12% Month Source: Bloomberg, as of 29 st December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 29

31 DLC VS OTHER LEVERAGE PRODUCTS BRIEF COMPARISON DLC Daily Leverage Certificates CFD Contract For Differences Structured Warrants Major price movement factors Underlying price Underlying price Underlying price, time to maturity, volatility etc. Time decay No No Yes Leverage level 3 x / 5x / 7x 10 20x ~ 5 50x Leverage fixation Maximum Loss Yes with daily reset Invested Capital Yes upon reset Potentially more than invested capital No Invested Capital Access Listed on SGX OTC Listed on SGX Margin required None Yes None Compounding effect Yes No No SIP* Yes Yes Yes * Specified Investment Products 30

32 A CLOSER LOOK AT DLC Fees, Compounding, Air Bag and Others

33 COMPOUNDED RETURNS DLCs are designed around the daily performance of the Underlying Asset and as such are intended to be traded intraday They apply a fixed level of leverage which makes it easy to determine how the price of a DLC will move during a single trading day, it will simply be 3, 5 or 7 times the daily performance of the Underlying Asset Investors can, however, hold DLCs for longer than a day although their return on them could be more or less than the leverage factor that is embedded within the product. This is because the performance of the underlying asset and the DLC is reset at the end of each trading day. When markets open the next day, the performance of the Underlying Asset and the DLC will be measured from the closing levels recorded the trading day before. What this means, in practice, is the performance each day is locked in, and any subsequent returns are based on what was achieved the day before. This is a process referred to as compounding. This means returns will deviate from the leveraged performance of the Underlying Reference Index, on a period longer than a single trading day 32

34 COMPOUNDED RETURNS Illustrative returns from a DLC with 7x Leverage (Long): 1) Trending 2) Volatile Underlying 1 DLC (7x) Underlying 2 DLC (7x) S$ S$ % +7% +2% +14% Day 1 S$ Day 1 S$ % +14% -4% -28% Day 2 S$ Day 2 S$ % +7% +6.26% +44% Day 3 S$ Day 3 S$ % % +4.05% % The same performance of the underlying can result in a varying performance by a Daily Leverage Certificate. In the following scenarios 1 and 2, the underlying reaches the same level of after three days - however, on different paths. The Daily Leverage Certificate performs differently in each scenario. In scenario 1, the underlying is on a clear upward trend, whereas in scenario 2 it is not. In this case, the Daily Leverage Certificate performs better in scenario 1 than in scenario 2. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 33

35 TRANSPARENT COSTS & FEES Trading fee applied to DLC: Fee Type Fee Amount Remark Trading access fee 0.001% vs % for equities Clearing fee 0.004% vs % for equities Brokerage fee Determined by broker Fee applied to DLC if held overnight: Leveraged Costs and Fees Hedging Costs and Fees Fee Type Fee Amount Remark Funding Cost Rebalancing Cost Gap Premium Management Fee Interbank offered Rate plus spread Rebalancing cost 3x: 1.8% p.a. 5x: 3.0% p.a. 7x: 4.2% p.a. 0.4% p.a. A function of leverage and daily performance of the index The Gap Premium and Management Fees will be published on the Societe Generale website and updated daily Note: For the first listings of DLCs, rebalancing cost is only applicable to DLCs of HSI and HSCEI, and not MSCI Singapore Free 34

36 COSTS AND FEES RECAP Weekly Costs and Fees (SGD) 5x HSI Long Average daily costs & fees (bps) Weekly Costs and Fees (SGD) 5x SIMSCI Long Average daily costs & fees (bps) /21 8/11 9/1 9/22 10/13 11/3 11/24 12/ /21 8/11 9/1 9/22 10/13 11/3 11/24 12/15 0 Week ended On Week ended On *The calculation for Costs & Fees for 7x DLCs will be the same as 3x and 5x except the Gap Premium being 4.2% instead of 1.8% for 3x and 3.0% for 5x. Source: as of 29 th December 2017 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 35

37 AIRBAG MECHANISM Both the Long and Short DLCs include an Air Bag mechanism, which is designed to slow the rate of loss in extreme market conditions. The Air Bag comes into effect at a predetermined Trigger Level. If this does occur, the Air Bag triggers an intraday re-set of the Underlying Index. The reset takes place over a short period (30mins). Following the reset, the performance of the Underlying Index is based on the new observed level. This is designed to reduce the impact of any subsequent fall. Note: When the Air Bag Mechanism is triggered, the DLC will be suspended from trading for a period of 30-45mins (observance period of 15 minutes and price reset period of 15 minutes). Trading will resume afterwards. For LONG DLCs, Air Bag Mechanism will only be triggered if the Underlying index FALLS to the trigger level For SHORT DLCs, Air Bag Mechanism will only be triggered if the Underlying index RISES to the trigger level Benefits Slows the rate of losses Risks Limited recovery in case of rebound in Underlying Index level S$ 2.00 Prevents investors losing all their initial capital Leverage Air Bag Trigger S$ % Air Bag Activated RISE FALL 3x 20% 5x 10% 7x 10% Pre Air Bag Post Air Bag 36

38 AIRBAG MECHANISM WHAT HAPPENS IF THE UNDERLYING CONTINUES TO FALL AFTER AIR BAG EVENT? 0% Time -10% -20% -30% -40% New Observed Level Trading will be halted for around 30 minutes. -50% -60% -70% -80% Index Daily Performance Leverage Strategy Daily Performance Air Bag trigger Leveraged Index without Air Bag -90% -100% Without Air Bag Mechanism, Leveraged Strategy would have reached 0 The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 37

39 AIRBAG MECHANISM WHAT HAPPENS IF THE UNDERLYING BOUNCES BACK AFTER AIR BAG EVENT? 0% Time -10% -20% -30% -40% -50% -60% -70% -80% -90% Index Daily Performance Air Bag trigger Leverage Strategy Daily Performance Leveraged Index without Air Bag New Observed Level Trading will be halted for around 30 minutes. Without Air Bag Mechanism, Leveraged Index would have recovered more -100% The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 38

40 AIR BAG MECHANISM: HISTORICAL SIMULATIONS Simulated Air Bag Events, based on historical daily returns of HSI and MSCI Singapore Source: Bloomberg The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 39

41 DLC TICK SIZE Tick size: DLC price DLCs as a kind of leverage products, price of which is sensitive to underlying index movement. For example, for 5x Long DLC on HSI as of 19th Jan 2017, it only takes 0.03% movement of HSI, i.e points to trigger one tick movement of the DLC price HSI 5x HSI 7x DLC Price Pts per tick Pts per tick SIMSCI 5x SIMSCI 7x DLC Price Pts per tick Pts per tick Investors should be aware that if the change in Underlying Asset is too small and the implied effect on DLC prices is smaller than the minimum tick, the DLC price will remain unchanged. Please refer to the next slide for more details. 40

42 DLC TICK SENSITIVITY Sensitivity refers to the amount of index point movement needed to trigger one tick move of the corresponding DLC price Underlying Index Leverage Long / Short Stock Code MSCI Singapore Free Index Hang Seng Index Hang Seng China Enterprises Index 5X 7X 3X 5X 7X 3X 5X 7X Intrinsic Close (31/1/2018) Sensitivity Long CIOW Short CIXW Long CPVW Short CPWW Long CIWW Short CIVW Long CIUW Short CITW Long CPRW Short CPSW Long CISW Short CIRW Long CIQW Short CIPW Long CPTW Short CPUW *Source: Societe Generale, as of 31 ST January

43 DIVIDEND EFFECT (31 AUG 2017) On 31 st Aug 2017, ex-dividend of China Mobile Limited (0941.HK) occurred. The cash dividend was HKD4.823 which contributed approximately index points drop for HSI. The percentage change of intrinsic closing values for HSI products (from 30 Aug to 31 Aug) deviated from the leverage factors +4.95%* If the ex-dividend effect was excluded, the HSI closing level on 31 Aug would have been 28, (27, ). Date Closing HSI 3x Long (CIWW) 5x Long (CIUW) 3x Short (CIVW) 5x Short (CITW) % Change Intrinsic Close % Change Intrinsic Close % Change Intrinsic Close % Change Intrinsic Close 30 Aug % -0.27% -0.57% +0.45% 31 Aug % Change +0.71% Source: Bloomberg for HSI, for DLC intrinsic close values*, 30/08/2017 to 31/08/2017 * Intrinsic Close is the value computed using the valuation formula of the Certificates stated on the relevant supplemental listing documents at market close. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. Illustrations above have not taken into account Costs and Fees. 42

44 DIVIDEND EFFECT You may now check both historical and future dividend effect of our available underlying indices Visit dlc.socgen.com Source: dlc.socgen.com, as of 22 nd January

45 HOW TO TRADE Name on the Exchange What happens at Expiry of the DLC? DLCs have a finite lifespan with a maximum tenure of 3 years from issue date and will be automatically exercised on the Expiry Date (or if the expiry date is not a business day, the immediately preceding business day). Upon expiry of the DLC, it will be exercised by the issuer at a price equal to the closing price of the DLC on the last trading day. This cash settlement amount (less expenses) will be deposited into the DLC holder s bank account appearing in the records maintained by CDP. Holders of DLCs will not be required to deliver an exercise notice or instruct their brokers. What happens when underlying is closed for trading? During non-hkex trading hours, the Daily Leverage Certificates related to HSI and HSCEI will still continue trading. However, the DMM is not obliged to provide a quote at any time when the Underlying Asset is not traded. Even if the DMM does provide a quotation outside of the trading hours of the exchange on which the Underlying Asset constituents are trading, the bid/ask spreads might be wider and quote size might be smaller compared to that during HKEX trading hours. Therefore, investors need to take additional caution regarding any transactions conducted when the Underlying Asset is closed for trading. 44

46 HOW TO TRADE Daily Leverage Certificates Specifications Traded on Type of DLCs Trading Hours Trading Currency SGX-ST Long and Short DLCs on local and foreign benchmark indices 9:00 am 5:00 pm (Follow SGX-ST trading hours) SGD Issue Price SGD 2.50 Board Lots Size 100 Exchange Fees Tick Size => Expiry Date Leverage Cleared Trading Fees: 0.1 basis points or 0.001% of traded value Clearing Fees: 0.4 basis points or 0.004% of traded value => and above => 0.01 DLCs have a finite lifespan and cease to exist on expiry date. (Maximum tenure of 3 years from issue date, which is 14 July 2020) 3, 5 and 7 times Yes by SGX CDP 45

47 KEY FEATURES & RISKS Key Features Leverage. Gain amplified exposure to the Daily Performance of the Underlying Asset. Directional. Long or Short versions available for directional investment or hedging. Maximum Loss. Investors cannot lose more than they invest. Liquidity. The designated market maker provides continuous prices during normal market conditions on SGX, to ensure liquidity for trading. Transparency. Live tradable bid and ask prices quoted on exchange ensures every investor will see the same market prices for trading. Risk management. Air Bag mechanism is designed to slow the rate of loss in extreme market conditions when triggered. Key Risks Capital risk. Capital is fully at risk. Leverage risk. If the investment results in a loss, any such losses will be increased by 3 or 5 times, depending on the particular leverage. Consequently, investors could lose more than they would if they invested directly in the underlying asset. Currency risk. If the Leveraged Index is quoted in a currency different from the listing currency, exchange rate fluctuations between these currencies would impact the price of the product. Compound returns. The product is designed to provide a daily leverage. The product will not provide a fixed leverage to the underlying performance on a period longer than a Trading Day. Counterparty / Issuer risk. The investor bears a credit risk on Societe Generale. Please refer to listing documents for full risk disclosures Simplicity. Can be traded individually, just like a share through a stock broker or online trading account. 46

48 Think DLC. Think SG. 47

49 WHERE TO FIND DLC INFORMATION DLC.SOCGEN.COM

50 WEBSITE DLC.SOCGEN.COM Daily Leverage Certificate (DLC) is a listed product with fixed leverage factor issued by Societe Generale. It stands out amongst leveraged financial products with its simplicity and transparency. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 49

51 WEBSITE DLC.SOCGEN.COM (PRODUCT) Explore your Daily Leverage Certificate (DLC) investment opportunities with the Societe Generale Intelligent Search Engine. You can diversify your portfolio and boost your returns by trading DLC. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 50

52 WEBSITE DLC.SOCGEN.COM (SIMULATOR) Societe Generale provides an easy-to-use Simulator to help investors determine the performances of Daily Leverage Certificates (DLC) under different market scenarios before costs and fees. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 51

53 WEBSITE DLC.SOCGEN.COM (DLC INTRINSIC VALUES) Detailed Costs and Fees and Intrinsic Closing Values* for each DLC are available daily. Simply visit Product Terms and click Download at the Costs and Fees or Historical Performance Data section. * Intrinsic Close is the value computed using the valuation formula of the Certificates stated on the relevant supplemental listing documents at market close. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 52

54 WEBSITE DLC.SOCGEN.COM (EDUCATION) Societe Generale provides comprehensive educational materials such as videos and brochure to ensure investors fully understand the products before they invest. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 53

55 DAILY NEWSLETTER The DLC Daily Newsletter provides an overview of DLC intraday performances over the last trading day, as well as the Intrinsic Closing Values and the Sensitivity of the products. *Sensitivity is the number of index points movement that is the equivalent to a theoretical 1 tick movement of the DLCs, without taking exchange rate changes into account for HSI and HSCEI products. These values change as the values of the underlying asset and DLCs change. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 54

56 WEEKLY WEBCAST In cooperation with Phillip s trading specialist Robin Ho, a weekly webcast on the market and the products is on live at 2pm on every Monday. The information on this page is for illustrative purposes only, and is not indicative of future performance. Such information does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, the Daily Leverage Certificates at the price shown. 55

57 IMPORTANT INFORMATION (1/4) This advertisement has not been reviewed or endorsed by the Monetary Authority of Singapore. This document is distributed by Société Générale. If you wish to discuss this document, you should do so with your financial advisor, authorised broker or with MAS licensed representatives of Société Générale, Singapore Branch.. This document does not constitute or form part of any offer, or invitation, to subscribe for or to sell, or solicitation of any offer to subscribe for or to purchase, any certificates on indices (the Certificates or Daily Leverage Certificates ), warrants or other securities. Nothing herein should be considered as investment or financial advice or any form of recommendation to purchase or sell the Certificates/Daily Leverage Certificates, warrants or other securities mentioned. Information herein is intended as general information only and does not take into account the specific investment objectives, financial situation and the particular needs of any particular person. The price of Certificates/Daily Leverage Certificates, warrants or other securities and/or the price of the underlying asset may fall in value as rapidly as it may rise and holders may sustain a total loss of their investment. Investments in the Certificates/Daily Leverage Certificates, warrants or other securities carry risks. Any past performance of the Certificates/Daily Leverage Certificates, warrants or other securities, or past performance of an underlying asset, is not indicative of future performance. This document does not constitute a full disclosure of the risks involved. Members of the Société Générale group and/or its connected persons may take proprietary positions and may have long or short positions or other interests in the Certificates/Daily Leverage Certificates, warrants or other securities and may purchase and/or sell the Certificates/Daily Leverage Certificates, warrants/ or other securities at any time in the open market or otherwise, in each case whether as principal, agent or market maker. The terms and conditions of any Certificates/Daily Leverage Certificates, warrants or other securities must be read in conjunction with the base listing documents for those Certificates/Daily Leverage Certificates, warrants or other securities and the relevant supplemental listing document. Investors should therefore ensure that they understand the nature of the Certificates/Daily Leverage Certificates, warrants or other securities and carefully study the risk factors set out in the base listing document and the relevant supplemental listing documents and, where necessary, seek professional advice before investors invest in the Certificates/Daily Leverage Certificates, warrants or other securities. Copies of the base listing document, which contains financial and other information relating to the Issuer and any addenda thereto and the relevant supplemental listing documents, which contain details of the Certificates/Daily Leverage Certificates, warrants or other securities, can be obtained from the Allen & Gledhill LLP at One Marina Boulevard #28-00, Singapore Investors should read these documents in their entirety before agreeing to invest in the Certificates/Daily Leverage Certificates, warrants or other securities. This is a structured product which involves derivatives and investors should not invest without fully understanding and being willing to assume all risks associated with the Certificates/Daily Leverage Certificates, warrants or other securities. Investors should ensure they understand the risks, nature, terms and conditions of the Certificates/Daily Leverage Certificates, warrants or other securities and consult their own legal, financial, tax and professional advisers regarding the suitability and risks before committing to any investment. Investors risk the loss of part or all of their investment. Investment in the Certificates/Daily Leverage Certificates, warrants or other securities involves significant levels of risks and the Certificates/Daily Leverage Certificates, warrants or other securities should only be purchased by investors who are knowledgeable in investment matters or who have obtained appropriate investment advice. Société Générale and its affiliates (the SG Group ) act in different capacities in relation to the issue of the Certificates/Daily Leverage Certificates, warrants or other securities. SG Issuer is the issuer of the Certificates/Daily Leverage Certificates, warrants or other securities (the Issuer ), Société Générale acts as designated market maker for the Certificates/Daily Leverage Certificates, warrants or other securities. Société Générale, Singapore Branch is also authorized to distribute and market the Certificates/Daily Leverage Certificates, warrants or other securities to its customers. For the avoidance of doubt and as an independent stipulation, investors agree that by purchasing the Certificates/Daily Leverage Certificates, warrants or other securities, the SG Group may provide different services and/or perform different roles in relation to the issuance, offer and/or dealing in the Certificates/Daily Leverage Certificates, warrants or other securities. The investor acknowledges and agrees that the provision of such services or the undertaking of such roles may not always be consistent with the interests of the issuer and/or the investors. The investor agrees that subject to mandatory applicable law which the SG Group cannot derogate from, no implied duties or obligations shall be imposed on SG Group to the investor under the Certificates/Daily Leverage Certificates, warrants or other securities, and in connection with or as a result of the investor s subscription or purchase of the Certificates/Daily Leverage Certificates, warrants or other securities. The Issuer or Société Générale may have a position or a material interest in any underlying asset. The Issuer, Société Générale or any of their affiliates may engage in transactions involving the underlying asset for their own account for business reasons or in connection with hedging of the obligation under this Certificates/Daily Leverage Certificates, warrant or other securities. Conflicts of interest may arise as a result of such transactions within the SG Group and with the interest of investors. The Issuer, Société Générale and their affiliates are not required to consider any investors interests in connection with entering into any of the above mentioned transactions. 56

58 IMPORTANT INFORMATION (2/4) The Issuer, Société Générale and their affiliates may receive benefits and/or profits as a result of its multiple roles as designated market maker and/or distributor (whether in the nature of a fiduciary, similar or additional duty or relationship or otherwise) and fully consents to the retention of such benefits and/or profits for their own account. Each investor acknowledges and agrees that none of the Issuer, Société Générale and their affiliates is obliged to notify, and is liable to account to, an investor or any other person for (and each investor or such other person shall not be entitled to ask for disclosure of the fact or the amount of, any fees resulting from any of the aforementioned roles, other than is already disclosed in the offering documents for the Certificates/Daily Leverage Certificates, warrants or other securities. Each investor agrees that he will have no claim against for, the investor consents to the receipt by the Issuer, Société Générale and their affiliates of, and it shall be entitled to accept and retain, such fees arising from any such multiple roles. Société Générale does not make any warranty, express or implied, as to the accuracy or completeness of the information contained herein. No responsibility or liability is accepted by Société Générale for any inaccuracies, omissions, mistakes or errors of Société Générale in the computation of the cash settlement amount or for any economic or other loss which may be directly or indirectly sustained by any broker or holder of the Certificates/Daily Leverage Certificates, warrants or other securities or any other person dealing with the Certificates/Daily Leverage Certificates, warrants or other securities as a result thereof and no claims, actions or legal proceedings may be brought against Société Générale in connection with the Certificates/Daily Leverage Certificates, warrants or other securities in any manner whatsoever by any broker, holder or other person dealing with the Certificates/Daily Leverage Certificates, warrants or other securities. Any broker, holder or other person dealing with the Certificates/Daily Leverage Certificates, warrants or other securities does so therefore in full knowledge of this disclaimer and can place no reliance whatsoever on Société Générale. For the avoidance of doubt, this disclaimer does not create any contractual or quasi-contractual relationship between any broker, holder or other person and Société Générale and must not be construed to have created such relationship. The Certificates/Daily Leverage Certificates, warrants or other securities are not deposits placed with Société Générale. Hang Seng Index Net Total Return Index The Hang Seng Index Net Total Return Index (the "Index") is published and compiled by Hang Seng Indexes Company Limited pursuant to a licence from Hang Seng Data Services Limited. The mark and name Hang Seng Index Net Total Return Index are proprietary to Hang Seng Data Services Limited. Hang Seng Indexes Company Limited and Hang Seng Data Services Limited have agreed to the use of, and reference to, the Index by SG ISSUER in connection with the Certificates (the "Product"), BUT NEITHER HANG SENG INDEXES COMPANY LIMITED NOR HANG SENG DATA SERVICES LIMITED WARRANTS OR REPRESENTS OR GUARANTEES TO ANY BROKER OR HOLDER OF THE PRODUCT OR ANY OTHER PERSON (i) THE ACCURACY OR COMPLETENESS OF THE INDEX AND ITS COMPUTATION OR ANY INFORMATION RELATED THERETO; OR (ii) THE FITNESS OR SUITABILITY FOR ANY PURPOSE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT; OR (iii) THE RESULTS WHICH MAY BE OBTAINED BY ANY PERSON FROM THE USE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT FOR ANY PURPOSE, AND NO WARRANTY OR REPRESENTATION OR GUARANTEE OF ANY KIND WHATSOEVER RELATING TO THE INDEX IS GIVEN OR MAY BE IMPLIED. The process and basis of computation and compilation of the Index and any of the related formula or formulae, constituent stocks and factors may at any time be changed or altered by Hang Seng Indexes Company Limited without notice. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO RESPONSIBILITY OR LIABILITY IS ACCEPTED BY HANG SENG INDEXES COMPANY LIMITED OR HANG SENG DATA SERVICES LIMITED (i) IN RESPECT OF THE USE OF AND/OR REFERENCE TO THE INDEX BY SG ISSUER IN CONNECTION WITH THE PRODUCT; OR (ii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES OR ERRORS OF HANG SENG INDEXES COMPANY LIMITED IN THE COMPUTATION OF THE INDEX; OR (iii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES, ERRORS OR INCOMPLETENESS OF ANY INFORMATION USED IN CONNECTION WITH THE COMPUTATION OF THE INDEX WHICH IS SUPPLIED BY ANY OTHER PERSON; OR (iv) FOR ANY ECONOMIC OR OTHER LOSS WHICH MAY BE DIRECTLY OR INDIRECTLY SUSTAINED BY ANY BROKER OR HOLDER OF THE PRODUCT OR ANY OTHER PERSON DEALING WITH THE PRODUCT AS A RESULT OF ANY OF THE AFORESAID, AND NO CLAIMS, ACTIONS OR LEGAL PROCEEDINGS MAY BE BROUGHT AGAINST HANG SENG INDEXES COMPANY LIMITED AND/OR HANG SENG DATA SERVICES LIMITED in connection with the Product in any manner whatsoever by any broker, holder or other person dealing with the Product. Any broker, holder or other person dealing with the Product does so therefore in full knowledge of this disclaimer and can place no reliance whatsoever on Hang Seng Indexes Company Limited and Hang Seng Data Services Limited. For the avoidance of doubt, this disclaimer does not create any contractual or quasi-contractual relationship between any broker, holder or other person and Hang Seng Indexes Company Limited and/or Hang Seng Data Services Limited and must not be construed to have created such relationship. 57