SEA Digest: ADDX launches cash management solution; Bursa Malaysia launches two new ESG-themed indices

Asia’s private market exchange ADDX has launched a cash management tool that allows investors with excess funds in their wallets to earn interest while Bursa Malaysia Berhad (Bursa Malaysia) has launched two new ESG-themed indices under the FTSE Bursa Malaysia Index Series.

ADDX introduces cash management solution with Lion Global

Asia’s largest private market exchange, ADDX, has launched a cash management tool that allows investors with excess funds in their wallets to earn interest, instead of letting their cash sit idle, according to an announcement.

Named ADDX Earn, the solution aims to withstand short-term volatility while preserving capital.

The product line was curated to boost the returns of investors who have deposited money in their ADDX wallets but have yet to decide on which private market product to take part in.

Some of the idle capital may also have come from previous investment earnings on ADDX. Target returns for products under ADDX Earn are designed to be higher than short-term bank deposit rates – which is where many investors otherwise store undeployed capital.

The first two funds to be launched under the ADDX Earn umbrella are by Lion Global Investors, a fund manager that is a part of the OCBC Group.

The LionGlobaI SGD Enhanced Liquidity Fund and LionGlobaI USD Enhanced Liquidity Fund are invested in high-quality portfolios of debt instruments, diversified across a wide range of issuers and tenors while maintaining weighted average credit ratings 1 of “A”.

The two funds have weighted average portfolio durations of less than a year, which gives Lion Global the flexibility to adjust portfolio allocations in response to changing interest rates and market conditions.

Investors can redeem their investments through ADDX on a weekly basis. In addition, the funds target low-volatility assets, which are well-suited for the current market environment that has seen increased volatility in other asset classes.

Founded in 2017, ADDX is a full-service capital markets platform with Monetary Authority of Singapore (MAS) licences for the issuance, custody and secondary trading of digital securities. The financial technology company has raised a total of $120 million in funding since its inception in 2017, including $50 million in its Series A round in January 2021 and $58 million in its pre-Series B round in May 2022.

Bursa Malaysia launches two new ESG-themed indices

Bursa Malaysia Berhad (Bursa Malaysia) has launched two new ESG-themed indices under the FTSE Bursa Malaysia Index Series — the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Index (FBM100LC) and FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Shariah Index (FBM100LS).

These new indices add to the existing portfolio in the FBM Index Series suite that the exchange jointly issues with index partner FTSE Russell. The additions expand the exchange’s benchmarking offerings in the ESG, low-carbon and climate-risk index space to cater to evolving investors’ demand.

The FBM100LC Index tracks companies in the FBM Top 100 Index based on their ESG and carbon intensity performance, providing an opportunity for investors to reduce their investment portfolio’s carbon footprint.

The index methodology addresses ESG and climate change risks from multiple dimensions based on clear, transparent and targeted objectives. It is constructed using the FTSE Russell Target Exposure methodology, which applies successive tilts to capture target exposure and climate outcomes.

The index aims to achieve a maximum 30% reduction in Fossil Fuel Reserves Intensity, 30% reduction in Carbon Emissions Intensity, and 20% uplift in ESG Ratings. It excludes companies involved with controversial product activities such as weapons, thermal coal, extraction and electricity generation, tobacco, nuclear power, gambling, adult entertainment, and companies involved with controversies related to the UN Global Compact principles.

The launch of the index aims to further encourage ESG and low carbon adoption within the local capital market ecosystem, in line with the exchange’s vision to be a leading sustainable and globally connected marketplace.

 

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