The trade finance sector, worth trillions of dollars globally, is attractive and counts as an "alternative" because it has presumed low correlations with bonds and equities.
Standard Chartered’s private bank has launched a new investment product linked to trade finance – receivables finance for its high net worth investors.
The product, which has been originated by fintech Olea Global Pte, is exclusively distributed by the private bank. It gives HNW clients access to a portfolio of short-term post-shipment corporate receivables. The bank said the product meets clients’ needs for diversification and liquidity.
Asked for clarification by this news service, the bank said the product will only be offered to its private banking clients in Singapore, Hong Kong and Dubai.
Standard Chartered said it is rolling out the product at a time when trade finance has been expanding as an investment area. The global trading market’s financing needs are worth around $18 trillion, it said, citing figures from Boston Consulting Group. Benefits from the asset class include a low correlation to performance of stocks and bonds, and short credit duration, the bank said. As such, the area is an "alternative" asset class, on a par with life settlements, litigation finance and infrastructure investment, among others.
Olea, which focuses on supply chain solutions, has been incubated by SC Ventures, a division of Standard Chartered and majority-owned by the bank.