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SGX introduces new MSCI EM derivatives

SGX introduces new MSCI EM derivatives

Singapore Exchange (SGX) has launched net total return and price return futures on the MSCI Emerging Markets (EM) and MSCI EM Asia indices.

According to Ivan Han, head of south Asian equities, both MSCI EM as well as EM Asia have been one of the world’s best performing index this year delivering approximately two times the return of the MSCI World Index for developed markets.

‘We see growing interest among international investors for exposure to emerging markets, which have led the global market rally.

‘We are also addressing a demand for EM derivatives in the Asian time-zone, given the growing role of Asia in MSCI’s EM index, which will continue to increase particularly with the inclusion of A shares from next year,’ he told Citywire Asia.

According to the International Monetary Fund, year-to-date purchases of EM stocks and bonds to August more than doubled the total for 2015 and 2016.

Furthermore, with the projected per capital GDP growth in EM and developing economies of 3.7% between 2017 and 2022, compared to 1.4% for advanced economies, these capital and portfolio flows are expected to grow.

‘Asia is growing in its influence on MSCI EM price formation -it is currently the main underlying of the MSCI EM Index,’ Han said.

‘A key benefit of these new futures is the trading overlap with Asian stock and currency markets, which will enable the market we are creating to lead emerging market price formation and liquidity.’

Last month, SGX announced plans to launch 16 more thematic indices by June 2018. This comes after it launched four such indices earlier that month, and announced plans to consider themes like energy technology for future releases.

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