HSBC’s first AI & Data powered equity index structured note

Ravi Philemon
·5-min read

Data powered equity index structured note aims at helping Singapore investors to not only keep up, but thrive in an increasingly complex world of data

  • The AI & Data powered equity index structured note widens HSBC’s innovative product offerings to high net worth clients

  • he AI & Data powered equity index structured note further strengthens HSBC’s Asia Wealth proposition in Singapore**

Data powered equity index structured note
Data powered equity index structured note

HSBC Singapore has launched the AI Powered US Equity 5 Index (AiPEX5) and the Bank’s first Index Linked Structured Note to utilise artificial intelligence (AI) as a method for equity investing. AiPEX5 turns Big Data into investment insight by using AI to evaluate stocks with the aim of generating positive long-term returns to build wealth for investors.

Data powered equity index structured note a further step in the Bank’s strategy to develop market-leading, innovative solutions

Launched in July 2020, the USD-denominated AiPEX5 Index Linked Structured Note was offered to Singapore accredited investors within HSBC’s retail banking business, and is a further step in the Bank’s strategy to develop market-leading, innovative solutions to cement its wealth proposition in the region. The offer has since been concluded.

AiPEX5: Harnessing the power of AI

AiPEX5 is part of the family of indices that derive investment insight from AI and Big Data1, the first and only rules-based equity strategies to use IBM Watson to turn data into investment insight.

AiPEX5 operates by ingesting and learning from publicly available and continuously generated data points, examples of which include a company announcement, a tweet, a satellite image of a shop parking lot, or even the tone of language a CEO uses during an earnings presentation.

Applying what has been learned through Big Data and AI, AiPEX5 uses a rules-based process to objectively evaluate each of the 1,000 largest U.S. publicly traded companies2 and selects those whose stock prices are poised for growth. AiPEX5 rebalances its portfolio monthly, and to manage short-term volatility, AiPEX5 reallocates among chosen equity and cash on a daily basis. AiPEX5 selects companies with stock prices that may be poised for growth according to an objective selection process that is similar to a fundamental equity research approach, only thousands of times faster and broader in scope.

Data powered equity index structured note acts in real time

Gavin Powell, Head of Global Markets and Securities Service, HSBC Singapore: “Investors need strategies that act in real-time to process the vast quantities of Big Data across the world; each new piece of data represents a potential insight, which could lead to better investment outcomes.”

“AiPEX5 simulates a team of thousands of analysts and traders working around the clock to learn from millions of pieces of information and identify potential investment opportunities. The result is that we can offer clients solutions that not only keep up, but thrive in an increasingly complex world of data.”

HSBC is the exclusive licensor of AiPEX5 and is offering a variety of investment solutions based on the indices to its clients globally.

Data powered equity index structured note helps to strengthen Singapore’s position as an International Wealth Hub

The roll out of AiPEX5 marks a further step in HSBC’s strategy to strengthen its position as a leading global wealth manager.

Ian Yim, Head of Wealth and International, HSBC Bank (Singapore) shared: “In order for us to compete effectively in the high net worth space, we need to offer innovative investment products that respond efficiently to market volatilities and global uncertainties. Customers who have invested into the AiPEX5 Index Linked Notes like that it adopts a completely rules-based equity strategy, which eliminates human-biasness and is able to react to market conditions effectively.”

To better facilitate virtual investing, especially in response to the Circuit Breaker period, HSBC has doubled the spend and roll out of digital solutions for its retail banking business in Singapore over the past two years. These include:

  • HSBC Wealth Portfolio Plus: A fully paperless, digital investment tool that relationship managers use to conduct portfolio reviews and investment advisory engagements via video conferencing. This intuitive application is inbuilt with end-to-end financial planning and tracking capabilities. It also has risk and scenario analysis functions, which leverages technology provided by BlackRock’s Aladdin Wealth platform. HSBC is the first to offer Aladdin’s institutional analytical capabilities to retail investors in Singapore.

  • HSBC Structured Product Online Platform: An online solution offered to accredited investors to invest in structured products offered by the bank.

  • eSignature on Wealth Tablet: Singapore is the first within HSBC to launch eSignature on Wealth Tablet, where documents can be sent electronically to customers for their signatures to complete investment-related transactions.

Earlier this year, HSBC announced the launch of a new global business, Wealth and Personal Banking, combining Retail Banking and Wealth Management and Global Private Banking, to become one of the world’s largest global wealth managers with USD1.4 trillion in assets, with nearly half of the assets from Asia3.

HSBC Wealth and Personal Banking covers the entire spectrum of private wealth, from retail clients to ultra-high net worth (UHNW) individuals. Across Asia, where wealth pools are growing faster than in any other region, HSBC’s wealth revenues grew 12% in 2019 (year on year) to USD5.7 billion. HSBC will continue to invest in its wealth management business globally, with a particular focus on Asia, including Hong Kong and mainland China (especially the Greater Bay Area) as well as Southeast Asia, some of the world’s fastest growing economies. Singapore is central to HSBC’s Asia Wealth ambitions.

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