Singapore Exchange’s derivatives arm said on Tuesday it will launch Asia Pacific government bond futures on April 20, adding a new product aimed at helping global investors hedge sovereign interest rate exposure across five emerging Asian markets.
The new contracts will cover government bond markets in India, Indonesia, Malaysia, Thailand and the Philippines, SGX Derivatives said in a statement. The contracts will be the first exchange-listed regional government bond futures quoted on SGX, margined and settled in U.S. dollars.
The launch comes as international investors raise allocations to emerging Asian sovereign debt in search of yield and diversification, amid interest rate differentials with developed markets.
The futures will be based on FTSE Russell’s newly launched Asia Pacific Liquid Government Bond Index Series and will reference baskets of government bonds from the five markets. They will be offered in three maturities — three-year, five-year and 10-year — allowing investors to manage duration and yield curve exposure across the region.
William Chin, head of rates derivatives at SGX Group, said Asian government bond markets were becoming a bigger part of global fixed-income portfolios, increasing the need for tools that allow investors to hedge regional rate exposure efficiently.
“Asia’s government bond markets are becoming core allocations in global fixed income portfolios,” Chin said. “As participation broadens, the ability to hedge and trade Asian sovereign rates efficiently – without navigating fragmented access frameworks – is essential.”
Scott Harman, FTSE Russell’s global head of fixed income, currencies and commodities, said the new index series was designed to support tradable outcomes for international investors and provide a liquid benchmark for futures tied to Asia’s local currency bond markets.
The launch broadens SGX’s derivatives offering across commodities, equities, interest rates and foreign exchange, and adds sovereign rate products to its multi-asset platform.
SGX said the contracts are intended to give investors a more transparent and standardised way to manage Asian sovereign bond exposure within a U.S. dollar-based portfolio framework commonly used by global asset managers.
Business News Asia
