Singapore Exchange (SGX), in partnership with Nikkei, has launched the SGX Nikkei ESG-REIT Index Futures contract on June 14, making it the world’s first ESG-REIT derivative.
The instrument provides investors access to the Japanese REIT sector and is part of the SGX FIRST sustainability platform, which aims to meet rising demand for integrating Environment, Social and Governance (ESG) considerations into investment portfolios.
The underlying Nikkei ESG-REIT Index uses tilt methodology to adjust the weights of constituents using ESG ratings as evaluated by GRESB, the global ESG benchmark for real assets.
“Given strong investor demand for yield, deep liquidity and keen issuer participation, we are delighted to expand our partnership with Nikkei to offer investors another trusted tool for ESG investment and risk management,” says Michael Syn, head of equities at SGX.
The Nikkei ESG-REIT Index consists of 60 Tokyo-listed stocks, which comprise nearly 100% of the US$160 billion market capitalisation of Japan’s listed REIT securities market – the largest in AsiaPacific.
There are 19 listed Japanese REIT exchange traded funds (ETFs) with total assets under management of US$16 billion, of which one-third has emerged in the past three years.
Shares in SGX closed up 16 cents or 1.52% higher at $10.71 on June 14.
Cover photo: SGX
