HSBC Bank International has been granted permission to market offshore investments in South Africa a...
HSBC Bank International has been granted permission to market offshore investments in South Africa and has set up an office in Johannesburg.
The move follows the South African government's decision to ease foreign exchange regulation, allowing residents to invest R750,000 offshore.
HSBC can now offer South African residents access to its Global Investment Funds range.
Martin Spurling, head of international sales for HSBC, said: "South Africa has always been seen as a tremendous expat market, both because of Europeans living in South Africa and because of the number of expatriate South Africans, all who have need of offshore investments. But it has never been easy to get money out of South Africa or to get funds registered."
Now that this has changed, HSBC will use Johannesburg as a base to push into market in Namibia, Zimbabwe, Botswana and Mauritius.
The funds are being sold either via intermediaries or via 'product factories' which buy funds wholesale and then sell distribute them to intermediaries.
"We are keen to get this kind of volume business. However, they act as institutions so they get institutional pricing," Spurling said.
It is offering intermediaries marketing material, sales strategies and training. All they need do is get the investor to sign on the dotted line. The contract is then faxed to HSBC Fund Administration in Jersey and the registration and the administration will be done.
Spurling said: "This model is working well for us in the Middle East, Malta and some parts of Asia. We are just extending it to Southern Africa."
Of the 24 GIF funds, 17 have been authorised already. The remaining eight have been held back because they do not comply with South African regulation. For example, the HSBC Japan fund is regarded as holding too high a proportion of derivatives. But Spurling thinks that at the impressive rate the South African economy and regulatory environment have changed it is only a matter of time before more GIF funds are able to be authorised.
Another product HSBC is trying to register is a Dublin-based capital guaranteed fund, launched in July. It is the first Ucits fund of its type to be authorised there and it also authorised to be sold into Singapore, the first HSBC capital guaranteed fund to be able to do this. The Hong Kong authorities are contemplating authorisation.
The HSBC International Capital Secured Growth Funds (CSGF) will replace the HSBC International Guaranteed Capital Bonds. Changing to a Ucits structure means the fund can be marketed more broadly.
The four-year CSGF offers capital security and 70% exposure to either the European, Asian or US stock markets. For Europe, the benchmark comprises 50% FTSE 100 and 50% Dow Jones EuroStoxx50. For Asia, it is a quarter each from the Nikkei 225, the Hang Seng, Singapore Straits Times and the ASX.
The market chosen for this product's predecessor has been overwhelmingly Europe. The new launch has seen a parity between Europe and Nasdaq, as investors seek a protected form of US tech exposure, especially following the recent correction.
Unlike its previous incarnation, the fund has an early redemption facility, so investors can redeem twice monthly at NAV. For this, there is 3% charge and no capital guarantee, but it means that, for example, if after a three-year Nasdaq bull market an intermediary believes it will be down from then on, they can pull out with relatively little performance loss.
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