Société Générale's partnership with boutique research Japaninvest has helped the broker to strengthen its cash equities platform in Asia as well as providing a catalyst for growth and further integration between its cash and derivatives capabilities, said Timothee Bousser, the firm's head of global equity flow for Asia Pacific.
SG and Japaninvest formed a trading and research alliance in June 2010 to provide co-branded Asian equity research to institutional clients globally. As part of the agreement, SG distributes Japaninvest's research, branded Ji ASIA, and is able to utilise Japaninvest's sales force. In return, SG provides Japaninvest with execution capabilities. Ji ASIA's sales team has expanded significantly over the past year; recent hires include Glen Wood, head of sales, Tokyo, from Goldman Sachs.
“Our cash equity execution platform was mainly there for servicing our derivatives needs, hedging, our internal needs and some of our global accounts, but we never really actively sold this platform. We have invested in the last two years into getting more sales trading and sales capabilities onto our cash product,” Bousser said. ”¨”¨
Historically strong in equity derivatives, SG had always placed great emphasis on the engineering of products, and on macro and quant research. “We were definitely missing one leg, which was the fundamental research on Asian equities. Our partnership with Ji ASIA has been a milestone over the last year,” Bousser added. “We just started a year ago and the number of doors that has been opened over the last year has been absolutely key and is complementary to our existing process of expanding access to the large institutions and fund managers on the derivatives side.” ”¨”¨
Japaninvest, founded in 2002 and listed on the Tokyo Stock Exchange, provides independent equity markets research. Its Asia-based analyst team, operating from Tokyo and Hong Kong, has covered over 600 Japanese and Asian stocks since inception and provides fundamental coverage of major blue chips as well as growth mid caps, supplemented by update coverage on 200 small caps per annum. Driven by demand for independent research as part of the global trend towards unbundling of commission payments for trading and research services, Japaninvest has been expanding its coverage of Greater China. Currently, two third of its coverage is on Japanese equities and one third on Greater China.
“We've seen an increase in the realignment of content and research within the various market providers. The crisis has brought back this business model on the sell-side where a few providers are able to provide everything and this is why our overall strategy was to find a research house that was very strongly perceived by the buy-side and that complements our execution capabilities,” Bousser added.
Bousser insists that Ji ASIA has managed to fill a gap in research coverage in Asia, where traditionally coverage by Asia ex-Japan and Japan analysts has been clearly segregated. “We believe an integrated approach combining Japan fundamental research and Asia ex-Japan would bring more in-depth content, especially when it comes to the analysis of the supply chain, and trade balance between Japan and the Greater China area,” he said.
Author: Jill Wong