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CSOP launches low carbon ETF on SGX

CSOP Asset Management will list its third ETF on SGX – CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF (Stock Code: SGD counter: LCS/ USD counter: LCU) on 28 September 2022 and the initial offering period has already started on 23 September 2022.

LCS/LCU will adopt a representative sampling strategy to track the performance of the FTSE Asia Pacific Low Carbon Select Index to present the investment opportunities of the low carbon market. With AUM of USD 105 million, CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF is the largest equity ETF by AUM on listing in Singapore according to Bloomberg data. LCS/LCU will be available for initial investment in SGD and trading in both SGD and USD at an inception price of USD1 with board lot size of 1 unit. The firm writes that the launch of LCS/LCU also marks a strategic collaboration between CSOP and CGS- CIMB Securities, with commitment to bring more ESG themed products to this region in partnership.

The firm writes that greenhouse gas (GHG) is released during the combustion of fossil fuels, such as coal, oil, and natural gas, to produce electricity.

“GHG emissions are causing devastating changes around the world, leading to severe and irreversible ramifications for human and the environment. Shifting to a low carbon economy is imperative and becomes a common goal on a global scale that will be beneficial both environmentally and financially. As of December 2020, many countries have declared their intentions and targets for net-zero emissions for economic transformation. An increasing number of pension funds and sovereign wealth funds have begun to focus on carbon emission metrics when investing. Moreover, global carbon-neutral ETF AUM grew quickly between 2018 and 2022, reaching to almost USD 35 billion. Worth noticing, though the Asia-Pacific region emits more than half of the world’s GHG emissions, the investment products focusing on low carbon economy of APAC are insufficient, which presents huge potential for growth.”

Designed to reflect the performance of large and mid cap stocks in Asia Pacific markets, and to obtain more exposure to companies with low carbon characteristics, FTSE Asia Pacific Low Carbon Index encompasses 214 constituents from 2,431 constituents of FTSE Asia Pacific Index universe with exclusion of companies involved with controversial product activities. The companies with fewer fossil fuel reserves and fewer operational carbon emissions will have higher index weights.

The firm writes that tracking the index, CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF helps investors capture the opportunities presented by low carbon transition in APAC with great diversification and tradability at minimal investment of only USD1.

Ding Chen, CEO of CSOP comments: “We are very glad to partner with CGS-CIMB Securities (Singapore) Pte Ltd to launch CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF (LCU/LCS). As an award-winning ETF issuer, CSOP confidently introduces this low-carbon themed ETF to Singapore’s investors, seizing together the opportunities presented by this region with the greatest potential for low-carbon economy growth. We look forward to bringing ever more cost-effective options for investors to diversify their portfolios. The launch of CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF (LCU/LCS) is a milestone for CSOP’s footprint in Singapore and we hope it can contribute to the development of Singapore’s financial market.”

Wang Sheng, President of China Galaxy Securities, says: “Carbon Neutrality and Carbon Peak are of great significance for China’s high-quality development and global green low-carbon transformation. Financial institutions should play an active catalytic role in injecting new momentum into the low carbon industry through financing and promoting the realisation of the Dual Carbon goal. As the first Singapore-listed low carbon ETF covering the Asia Pacific region, I believe this not only marks a new milestone in the China-Singapore financial collaboration, but also serves as a successful model for green development under the ‘Belt and Road Initiative’ as we build a win-win future for all China and ASEAN capital market participants with our first-class comprehensive financial services.”

Carol Fong, Group CEO of CGS-CIMB Securities, says: “Climate change is a real and pressing issue facing our world today. At CGS-CIMB, we are committed to empowering individuals to make impactful investment decisions for a sustainable tomorrow. We are proud to be launching the CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF which has raised about Singapore 150 million –the largest equity ETF to be listed on SGX. This is one of the many initiatives that we will be launching as part of our sustainability journey.”

Michael Syn, Senior Managing Director and Head of Equities, SGX Group, says: “As the world faces up to the transition challenge, it has emerged as a top priority for investors to evaluate their investments through a climate lens to better manage related risks in their portfolios and at the same time, seek out related opportunities. This product caters to the increasing demand from investors who wish to incorporate climate consideration into their Asia Pacific portfolios. We will continue our work with CSOP Asset Management and CGS-CIMB to enhance our ETF product shelf to meet the evolving needs of investors globally.”

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