Singapore Exchange (SGX), the leading international market for real estate investment trusts (REIT), today launched the world’s first ESG REIT derivatives, fast-tracking access to the growing Japanese REIT sector for global asset managers and investors.
The SGX Nikkei ESG-REIT Index Futures contract, another thrust of the SGX FIRST sustainability platform, aims to meet rising demand for integrating Environment, Social and Governance (ESG) considerations into investment portfolios. The launch deepens SGX’s decades-long partnership with Nikkei Inc., Japan’s flagship news organisation and index calculator – a collaboration that began with the historic introduction of the SGX Nikkei 225 Index Futures in 1986. The underlying Nikkei ESG-REIT Index uses tilt methodology to adjust the weights of constituents using ESG ratings as evaluated by the GRESB, the global ESG benchmark for real assets.
Michael Syn, Head of Equities at SGX, said, “We have always been a pioneer in the global REIT space, having established a vibrant ecosystem around this asset class since the first Singapore-REIT listing in 2002. 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.”
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 Asia-Pacific. 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.
