Mirae Asset Global Investments has launched a new ETF in Hong Kong under its Global X brand, providing exposure to green bonds from issuers located in Asia excluding Japan.
Jung Ho Rhee, CEO of Mirae Asset Global Investments (Hong Kong).
The Global X Bloomberg MSCI Asia Ex Japan Green Bond ETF has been listed on the Stock Exchange of Hong Kong in Hong Kong dollars (Ticker: 3059 HK) and Chinese renminbi (83059 HK).
The fund represents the firm’s first fixed income ETF in Hong Kong as well as the world’s first Asia ex-Japan green bond ETF.
Green bonds are fixed income securities whose proceeds are exclusively and formally applied to projects that promote climate or other environmental sustainability purposes.
The issuance of green bonds in Asia has risen exponentially in recent years – according to the non-profit Climate Bonds Initiative, Asia Pacific is the world’s second-biggest region for green bond issuance with a cumulative total of $371.7 billion in 2021. Despite the sizable market, Asia Pacific is also the fastest-growing region for green bond issuance with year-on-year growth of 129%.
Jung Ho Rhee, CEO of Mirae Asset Global Investments (Hong Kong), said: “With Asia Pacific accounting for around half of the world’s carbon emissions and temperatures in the region rising twice as much as the global average, urgent action is required to tackle climate change.
“The Global X Bloomberg MSCI Asia Ex Japan Green Bond ETF enables investors to align their portfolios with sustainability objectives and invest in climate action projects that have a positive environmental impact. Green bonds also offer the means for investors to access stable and sustainable income and can be used to add defensive resilience to portfolios.”
Methodology
The fund is linked to the Bloomberg MSCI Asia Ex Japan USD Green Bond Index which was developed by Bloomberg while using MSCI ESG Research data to assess the credentials of eligible debt based on green bond principles criteria.
The index consists of government, government-related, corporate, and securitized bonds issued in Bangladesh, China, Hong Kong, India, Indonesia, Macau, Malaysia, Mongolia, Pakistan, Philippines, South Korea, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam. Only fixed-rate, investment grade, USD-denominated debt with a minimum par outstanding of at least $300m are eligible for inclusion.
To qualify for selection, bonds are required to meet the eligibility criteria as articulated in the green bond principles endorsed by the International Capital Market Association in 2014. These principles stipulate commitments on the use of proceeds which must be linked to projects aligned with alternative energy, energy efficiency, pollution prevention, pollution control, sustainable water, green buildings, or climate adaption.
The principles also include guidelines for green project evaluation and selection, the management of proceeds including a defined mechanism to ring-fence the net proceeds, and to the ongoing reporting of the environmental performance of the use of proceeds.
Eligible constituents are weighted by market value while capping the weight of any single issuer at 10%.
The ETF comes with ongoing charges of 0.40% and makes distributions on a semi-annual basis.