SOCIETE Generale on Thursday (Apr 28) launched 4 new 5x daily leverage certificates (DLCs) offering exposure to the Nasdaq-100 Index.

The DLCs are offered at 2 price points of S$2 and S$0.90. They provide 5x long and short exposure to the US tech-heavy index, the bank said in a press statement.

This means if the Nasdaq-100 index moves by 1 per cent from its closing price of the previous day, the value of the 5x DLC will move by 5 per cent. This applies to both losses and gains.

The Nasdaq-100 tracks the 100 largest domestic and international non-financial companies listed on the Nasdaq stock market as measured by their market capitalisation. It is also a modified capitalisation-weighted index, with a high concentration of high growth technology stocks.

Societe Generale noted that US indices DLCs are only traded during the Singapore Exchange (SGX) market hours from 9 am to 5 pm when the US market is closed. Thus, their intraday price movements are closely linked to the performance of the e-mini S&P 500 & Nasdaq-100 futures which are traded during Asian hours.

The Nasdaq-100 Stock Index E-mini futures is a stock market index futures contract traded on the Chicago Mercantile Exchange’s Globex electronic trading platform.

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Tiger Brokers Singapore director Edmund Lim said the DLCs allow investors to get in ahead of the US market open, or even hedge their US market positions in the case of high impact news during Asian hours.

The launch of the DLCs comes as the Nasdaq Composite index hits a 16-month low on Wednesday. The tech-heavy index had slipped 0.01 per cent or 1.81 points lower to close at 12,488.93. The last time the index closed near this level was Dec 14, 2020. The Nasdaq-100, meanwhile, hit a 1.5-month low at 13,003.36, down 0.1 per cent or 6.36 points.

DLCs are high-risk financial products that give investors a leveraged return based on the daily performance of an underlying reference instrument such as a stock or securities index like the Straits Times Index or the Nasdaq-100 index.

Only investors qualified to trade in specified investment products can trade in DLCs since they have structures, features and risks that may be more complex to everyday investors.

Societe Generale had launched the first DLC in Asia on SGX in 2017. At present, there are over 200 DLCs listed on the SGX. The bank noted that total turnover for its DLCs reached a high of around S$800 million in March on the back of volatile market conditions.

In the same month, the most actively traded DLCs were those tracking the Hang Seng Index, MSCI Singapore Index on the indices and Alibaba, Tencent, BYD, Meituan and Kuaishou on the single stocks.

“As the volatility continues to persist into April in both Asia and US markets, the introduction of DLCs on the S&P 500 Index and Nasdaq-100 Index will equip investors with an efficient and flexible instrument to gain exposure to the US markets, especially during the Asian time zone,” Societe Generale added.