SINGAPORE (THE BUSINESS TIMES) – The Singapore Exchange (SGX) has launched what it calls the world’s first environmental, social and governance (ESG) real estate investment trust (Reit) derivatives.
The new SGX Nikkei ESG-Reit Index Futures contract aims to meet rising demand for integrating ESG considerations into investment portfolios, the Singapore bourse operator said in a statement on Monday (June 14).
It added that the derivatives will fast-track access to the growing Japanese Reit sector for global asset managers and investors.
In the statement, SGX head of equities Michael Syn noted “strong investor demand for yield, deep liquidity and keen issuer participation”.
The underlying Nikkei ESG-Reit Index uses tilt methodology to adjust the weights of its constituents, using ESG ratings as evaluated by GRESB, or the Global Real Estate Sustainability Benchmark.
This index consists of 60 Tokyo-listed stocks, which make up nearly all of the US$160 billion (S$796,000) market capitalisation of Japan’s listed Reit securities market.
The launch deepens SGX’s decades-long partnership with Nikkei Inc, Japan’s flagship news organisation and index calculator. Their collaboration began with the historic introduction of the SGX Nikkei 225 Index Futures in 1986.
SGX shares rose 1.5 per cent, or 16 cents, to close at $10.71 on Monday, before the announcement.