SGX to Launch Asia’s First International REIT Futures

Source: Regulation Asia Editors, Regulation Asia 2020-08-06

Two new REIT futures contracts will launch on 24 August, both designed in accordance with CFTC guidelines to allow for distribution to US and global institutional investors.

SGX (Singapore Exchange) has announced the planned launch of Asia’s first international REIT futures.

The new contracts will be based on indices tracking REITs listed in Singapore, Hong Kong, Malaysia and Thailand, on the back of rising global investor demand for real estate related investment products and trading solutions, SGX says.

On 24 August, the exchange will launch:

SGX FTSE EPRA Nareit Asia ex-Japan Index Futures, based on a widely followed real estate index series, tracked or benchmarked by an estimated USD 340 billion assets under management
SGX iEdge S-REIT Leaders Index Futures, based on the most liquid index-basket representation of the Singapore REIT (SREIT) market

Both futures contracts are designed in accordance with CFTC (Commodity Futures Trading Commission) guidelines, allowing for broad distribution to US and global institutional investors.

“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,” said SGX head of equities Michael Syn.

“Over the past 18 years since the first REIT listing on SGX, we have established a strong REIT ecosystem with increasing investor interest, deep liquidity and active issuer participation. SGX offers a comprehensive product suite, ranging from stocks, REIT ETFs – and now REIT futures – to meet increasing customer demand.”

Singapore is the largest REIT market in Asia ex-Japan, with 44 REITs and property trusts combining for a market cap of SGD 98 billion (USD 71.4 billion).

The market cap of SREITs and property trusts has grown at a compounded annual growth rate of 15 percent in the last 10 years, in part due to high dividend yields (average 7.1%) and low volatility compared to other asset classes.

In 2019, close to 45 percent of REIT IPOs worldwide debuted on SGX, surpassing the largest REIT markets of the US, Australia and Japan.

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SGX to Launch Asia’s First International REIT Futures

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