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Profit from the booming Agricultural Market
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Structured Products
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New SG Agriculture Index Accelerator
The case for agricultural commodities
Soaring demand and falling supplies are increasing crop prices. The agricultural market is facing a boom and while this may be bad news for buyers, this may present a profi table opportunity for investors.
Population and economic growth in India and China have raised the global demand for meat. The feed for livestock required to meet this increased demand includes wheat or soya beans. The loss of crops acres, the weakening dollar and speculation on extreme global weather conditions will affect soft commodity production in the agricultural market. As countries such as the US and UK are committed to reducing their dependence on oil, there is potential to see a greater demand for ethanol, a biofuel alternative to oil derived from crops such as corn or soya beans.
How to profit from the rising agricultural market?
Investors looking for leveraged exposure to this market should consider the SG Agriculture Index Accelerator, a listed structured product linked to the S&P GSCI Agriculture Official Close Index ER, launched in March 2008. The minimum trading size is one certifi cate (issued at £1,000 on 6th March 2008).
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Click here to download the factsheet:
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How it works
-If held to expiry (4 years from the issue date), the holder of the SG Agriculture Index Accelerator will receive 200% of any rise in the index level (with reference to the index level on the initial reference date).
-The SG Agriculture Index Accelerator can payout up to £3,400, which is equivalent to a 240% increase on the issue level and which is achieved if the index rises by 120% or more.
-Should the index fall, the holder can lose 1% for each 1% the index falls, up to a maximum loss of 100% if the index level is down 100% or more at expiry.
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Key Facts
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| Classification |
Certificate |
| Underlying |
S&P GSCI Agriculture Official Close Index ER (Reuters .SPGSAGP)
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| Issue date |
6 March 2008 |
| Expiry date |
15 March 2012 |
| Currency |
GBP |
| Traded on |
London Stock Exchange |
| Settlement |
CREST |
| UCITS fund |
Eligible |
| SIPP |
Eligible |
| Product code |
SG50 |
The Accelerator is a certificate and can be held as a direct investment, in a SIPP and in SSAS pension wrappers. The Accelerator can be bought or sold on any trading day (although the initial investment term is 4 years). Profi ts are taxed as capital gains.
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About the index
The S&P GSCI Agriculture Official Close Index ER is a world-production weighted basket of physical commodities. The index currently consists of 8 components including wheat, corn, soya beans, sugar, cotton coffee and cocoa, thus providing a suitable benchmark for soft commodities.
Components must demonstrate a high level of liquidity to qualify for inclusion in the index and must also be traded on futures exchanges in major industrialised countries.
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