HSBC launches AI-powered equity index products in Malaysia
By Digital News Asia September 10, 2020
- AiPEX5 simulates team of thousands of analysts & traders working around the clock
- Data points could include tone of language a CEO uses during earnings presentation
HSBC Amanah Malaysia Bhd has recently launched the AI Powered US Equity 5 Index (AiPEX5) suite of structured products in Malaysia, which utilises artificial intelligence (AI) as a method of equity investing.
More specifically, it uses AI to identify companies whose stock prices are poised for growth, while managing draw-down risk during times of high market volatility. The combination presents an intriguing prospect to local investors at the moment, with the rising unpredictability of the financial markets due to the pandemic.
AiPEX5 offers some advantages compared to its human counterparts. By processing data thousands of times faster than humans and working around the clock, AiPEX5 attempts to gain an informational advantage over the rest of the market while it continues to learn and adapt as markets evolve and new information becomes available.
HSBC claims the AI Powered US Equity Indexes are the first and only rules-based equity strategies to use IBM Watson to continuously analyse and learn from millions of pieces of structured and unstructured data each day, and turn the data into investment insight.
AiPEX5 selects stocks by applying AI driven insight to improve on fundamental equity portfolio management techniques. At the same time, it incorporates a daily volatility control mechanism to reduce exposure to equities when markets are unstable.
“In today’s highly volatile markets compounded by the impact of the Covid-19 pandemic, investors need strategies that focus on providing steady returns at a reduced risk. However, successful investment strategies must keep up with the growing amount of data being generated each day,” says Alvin Kong (pic, left), HSBC Malaysia’s Global Markets head.
“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. This not only empowers clients to keep up with their investments, but thrive in an increasingly complex world of change.”
The AiPEX family of indices, which AiPEX5 is a part of, was developed by EquBot2 and leverage the AI capabilities of EquBot and IBM Watson to ingest and learn from the vast amounts of publicly available and continuously generated data points.
Data points could include a company announcement, a tweet, a satellite image of a store 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 US publicly traded companies. AiPEX5 rebalances its equity portfolio monthly, and to manage short-term volatility, reallocates between the equity portfolio and cash component 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.
HSBC Group is the exclusive licensee of AiPEX5, and is offering a variety of investment solutions based on the indices to its clients globally. Products linked to the AiPEX family indices have also been launched by HSBC in the US and in Singapore.
Tara Latini (pic, right), HSBC Malaysia’s head of Wealth and Personal Banking adds that big data signifies an “unprecedented opportunity” for investors seeking to invest in equities.
“Each new piece of data represents a new possible insight on a company or the markets that can potentially lead to better investment decisions. By investing in this structured product, investors will gain exposure to strategies that learn and evolve over time and do not rely exclusively on pre-programed, backward-looking and fixed measurements like most other quantitative indices in the market today,” she says.
“AiPEX5 is forward-looking and works by synthesising all available information in the past and present, in real time.”
Are we going to witness the beginning of the drop in interest from stock punters on brokerage reports? And will stock punters accept AiPEX5’s recommendations, even over their gut instinct?
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