SGX is launching Asia's first real estate investment trust (Reit) futures on the back of rising global investor demand for real estate-related investment products and trading solutions.
Singapore Exchange (SGX) will launch two Reit futures based on indices tracking diverse Reits listed in Singapore, Hong Kong, Malaysia and Thailand, the bourse said in an announcement on Tuesday.
The SGX FTSE EPRA Nareit Asia ex-Japan Index is based on the FTSE EPRA Nareit Global Real Estate Index, a widely followed global benchmark with an estimated $340 billion of assets under management actively benchmarked or passively tracking the indices, while the SGX iEdge S-REIT Leaders Index Futures is based on the iEdge S-REIT Leaders Index – the most liquid index-basket representation of the Singapore Reit (SReit) market and one of the most widely referenced in SGX’s suite of indices.
Set to debut on August 24, both futures are designed in accordance with Commodity Futures Trading Commission guidelines, which would allow broad distribution to U.S. and global institutional investors, the announcement said.
Reit Hub
SGX made its first Reit listing 18 years ago. Since then, Singapore has grown to become the largest Reit market in Asia ex-Japan, with 44 Reits and property trusts, which have a combined market capitalization of S$98 billion ($71.53 billion). Last year, close to 45 percent of Reit IPOs worldwide debuted on SGX, surpassing the largest REIT markets of U.S., Australia and Japan.
«Singapore is the Reits growth capital of Asia, attracting global institutional investors looking for defensive returns, particularly in today’s volatile markets and low-interest rate environment,» Michael Syn, SGX head of equities, said.
With the alignment in Reit performances globally and Singapore's role emergence as an international Reit hub, SGX said it plays a role in round-the-clock price discovery, in addition to facilitating significant rotation of institutional flows.
FY2020 Results
Last week, SGX reported net profit of S$472 million for the financial year 2020, up 21 percent from 2019. Double-digit top-line growth across all business units helped revenues cross the S$1 billion mark – its highest since listing.
«We focused on maintaining the robustness of our ecosystem and accessibility of markets amid the Covid-19 pandemic, while accelerating our growth plans. We are now in an even stronger position to meet the needs of our clients in this current low interest rate and uncertain environment,» CEO Loh Boon Chye said.
Recent Developments
SGX recently expanded its collaborative listings agreement with Nasdaq to enhance the oversight of dual listed issuers and streamline the relevant processes between both exchanges.
It also launched a futures contract based on the FTSE Taiwan RIC Capped Index (FTSE Taiwan) on July 20, and launched 10 Singapore Single Stock Futures (SSFs) on 15 June in response to growing client demand for a broader suite of Singapore-linked equities products.
At the end of June, SGX said it would discontinue its license agreements with index provider MSCI for equity futures indices and futures contracts when they expire in February 2021.
