As the world grapples with the pressing challenge of climate change, sustainable investing has gained significant traction. In this regard, the SGX MSCI Climate Action Indexes have emerged as a prominent benchmark for investors seeking to align their portfolios with climate-conscious strategies.
In this article, we will explore five key aspects that investors should know about the SGX MSCI Climate Action Indexes.
Whether you're an environmentally conscious investor or simply interested in staying ahead of the curve in the evolving financial landscape, this article will equip you with essential knowledge to navigate the world of SGX MSCI Climate Action Indexes effectively.
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What is SGX MSCI Climate Action Indexes?
Amidst the urgent global issues of climate change, institutional investors have increasingly embraced * ESG investing, with a focus on environmental considerations within the ESG framework.
Nevertheless, despite substantial attention and investments over the past few decades, ** GHG emissions continue to increase.
According to the International Energy Agency's estimates in May 2021 from SGX, achieving net-zero emissions by 2050 would require an annual global investment of USD 4 trillion. The current investment stands at USD 1 trillion per year.
This disparity has prompted investors to reassess their investment strategies relating to climate issues and explore innovative solutions that promote inclusive and comprehensive transition finance.
In this regard, Singapore Exchange (SGX) and Morgan Stanley Capital International (MSCI) launched its Climate Action Indexes. It is the world's first comprehensive suite of futures contracts that track MSCI Climate Action Indexes Net USD.
It covers regions such as the World, Europe, USA, Japan, and Asia Ex-Japan. These pioneering futures contracts provide traders with efficient tools to align their portfolios with climate-conscious strategies. They offer valuable insights into companies actively managing climate risks and transitioning towards a more sustainable future.
* ESG meaning: Environmental, Social, and Governance, representing a framework for evaluating a company's sustainability and ethical practices.
** GHG meaning: Greenhouse Gas, referring to gases that trap heat in the Earth's atmosphere, contributing to climate change.
Figure 1. Key Features of MSCI Climate Action Index Futures from SGX
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Why Trade in SGX MSCI Climate Action Indexes?
Investing in SGX MSCI Climate Action Indexes provides traders with exposure to leading companies addressing climate challenges, aligning portfolios with sustainability.
The SGX MSCI Climate Action Indexes contract offers investors a valuable tool to access a market capitalization-weighted index published by MSCI.
This index comprises companies that have been evaluated as leaders within their respective sectors based on four key climate indicators:
- Carbon intensity
- Emission reduction targets
- Green revenues
- Strength of climate risk management.
These indexes offer insights into climate performance, enabling informed decisions.
By investing, traders contribute to sustainable finance, supporting the transition to a low-carbon economy and potentially benefiting from climate-leading companies' growth. It presents a compelling opportunity to integrate climate considerations, capitalize on market opportunities, and drive positive change.
Figure 2. SGX MSCI Climate Action Index Futures Contracts Information from SGX
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SGX MSCI Climate Action Index Futures Contracts
The SGX MSCI Climate Action Index consists of different futures contracts that provide traders with exposure to a diverse range of sectors and regions. These futures contracts track the performance of companies that have demonstrated leadership in addressing climate-related challenges and transitioning towards a more sustainable future.
Below are the five Futures Contracts under the SGX MSCI Climate Action Index Futures:
- SFX MSCI Europe Climate Action NTR (USD) Index Futures
- SGX MSCI World Climate Action NTR (USD) Index Futures
- SGX MSCI AC Asia ex Japan Climate Action NTR (USD) Index Futures
- SGX MSCI USA Climate Action NTR (USD) Index Futures
- SGX MSCI Japan Climate Action NTR (USD) Index Futures
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SGX Trading Hours
The index futures contracts are available for trading during Asian, European, and US trading hours, providing extended trading opportunities for investors. With extended hours for trading, traders can efficiently execute trades globally.
The Trading Hours for the SGX MSCI Climate Action Index Futures are as follows:
Last Trading Day: Third Friday of the Contract Month
Listed Contract Months: Mar, Jun, Sep and Dec months on a 3-year cycle and 2 nearest serial months
Trading hours: T-session: 7.25am-6.30pm Singapore Time (SGT)
T+1 Session: 7.00pm-5.15am (next day) Singapore Time (SGT)
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How to Trade SGX MSCI Climate Action Index Futures?
Traders can trade the Climate Action Index Futures through Orient Futures Singapore. Orient Futures Singapore currently holds membership at the Singapore Exchange (SGX), which makes the trading process smoother for traders.
As a Singapore exchange, SGX is regulated by the Monetary Authority of Singapore (MAS) in the performance of its role as a front-line regulator and operator of the securities and derivatives markets. Their duty includes a list of rules, regulations, and roles that are strictly adhered to, increasing the safety of funds.
Apart from the Climate Action Index Futures, traders also can trade other futures contracts on SGX futures market through Orient Futures Singapore. These contracts include Mysteel Steel Rebar Futures, SGX Nifty 50 Index Futures, USD Nikkei 225 Index Futures and more.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
We provide premium customer service at an affordable cost to all our clients. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
