Alpha-Centric ESG Research

Kyle Rudden

If you have never heard of the Long-Term Stock Exchange (LTSE), that is understandable. It is new, and still quite small; in fact, it is the second smallest in the world (for reference LTSE is larger than the Armenia Securities Exchange and considerably smaller than the Bermuda Stock Exchange).But this is about strategy, not size.As the world's first and one-of-a-kind "ESG stock exchange," LTSE's evolution is worth watching. One big milestone came last week when Asana (ASAN US) and <a href="https://www.smartkarma.com/entities/twilio-inc" target="_blank" data-smartkarma-citation="entities:26473:1" rel="noopener">Twilio (TWLO US)</a> began trading; LTSE's first two listings, and solid "anchors" that should give other issuers confidence in LTSE.This Insight provides an overview of LTSE – its ESG business model, history, funding, expertise, and outlook including potential future listings. Not just from the perspective of LTSE, but also in terms of the broader implications for sustainable/ESG investing and capital markets.

If you have never heard of the Long-Term Stock Exchange (LTSE), that is understandable. It is new, and still quite small; in fact, it is the second smallest in the world (for reference LTSE is larger than the Armenia Securities Exchange and considerably smaller than the Bermuda Stock Exchange).But this is about strategy, not size.As the world's first and one-of-a-kind "ESG stock exchange," LTSE's evolution is worth watching. One big milestone came last week when Asana (ASAN US) and Twilio (TWLO US) began trading; LTSE's first two listings, and solid "anchors" that should give other issuers confidence in LTSE.This Insight provides an overview of LTSE – its ESG business model, history, funding, expertise, and outlook including potential future listings. Not just from the perspective of LTSE, but also in terms of the broader implications for sustainable/ESG investing and capital markets.

Asana and Twilio Are First Listings for ESG-Focused Long-Term Stock Exchange (LTSE)

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<h2>Headline Developments</h2>Steam, the video game distribution platform owned by Valve (private) , has released the long-rumoured handheld gaming device the Steam Deck; available from December (although big delays are expected with the premium $649 512GB version not available until 3Q22!).

Headline DevelopmentsSteam, the video game distribution platform owned by Valve (private) , has released the long-rumoured handheld gaming device the Steam Deck; available from December (although big delays are expected with the premium $649 512GB version not available until 3Q22!).

We see those big numbers in the press, almost daily it seems. About ESG assets under management (AUM) reaching US$40 trillion, expected to hit US$53 trillion by 2025. Or about quarterly ESG fund flows nearing US$100 billion, and the seismic shift in ESG AUM to passively-managed funds.Recent growth in SRI (sustainable and responsible investing) and ESG (Environmental, Social, and Governance) assets and investment products would not be possible without the growing ecosystem of index providers, and the SRI/ESG indices and benchmarks that they create.The ongoing boom in SRI/ESG indexing, which shows no signs of slowing, creates new opportunies for investors – and I do not mean investing in indexed mutual funds or ETFs. Too obvious, and too retail. I am referring to emergent opportunities associated with SRI/ESG index arbitrage.Index rebalancing/reconstitution events often create windows of abnormal returns for constituents being re-weighted, added, or dropped. That much is obvious, and the effects of broad market index changes are well-known. For SRI/ESG indices, this is uncharted territory with huge potential.This Smartkarma Original looks at the evolving SRI/ESG indexing landscape, and more importantly the emergent investing (e.g., stocks of listed indexers) and trading (e.g., arbitraging index changes) strategies arising from this global boom in SRI/ESG indices... from an Original perspective.<h2>WHAT'S ORIGINAL?</h2>Typically, discussions about SRI/ESG indices focus on their performance and in the context of that age-old "ESG-Alpha" debate – i.e., whether incorporating ESG factors into the investment process is worth the effort. To be clear, that is an important debate to have (and win). However, this report takes a different angle on SRI/ESG indices by focusing on investing and trading and strategies that capitalise on the boom in SRI/ESG indices. Theory (and a little speculation) backed by analysis.

We see those big numbers in the press, almost daily it seems. About ESG assets under management (AUM) reaching US$40 trillion, expected to hit US$53 trillion by 2025. Or about quarterly ESG fund flows nearing US$100 billion, and the seismic shift in ESG AUM to passively-managed funds.Recent growth in SRI (sustainable and responsible investing) and ESG (Environmental, Social, and Governance) assets and investment products would not be possible without the growing ecosystem of index providers, and the SRI/ESG indices and benchmarks that they create.The ongoing boom in SRI/ESG indexing, which shows no signs of slowing, creates new opportunies for investors – and I do not mean investing in indexed mutual funds or ETFs. Too obvious, and too retail. I am referring to emergent opportunities associated with SRI/ESG index arbitrage.Index rebalancing/reconstitution events often create windows of abnormal returns for constituents being re-weighted, added, or dropped. That much is obvious, and the effects of broad market index changes are well-known. For SRI/ESG indices, this is uncharted territory with huge potential.This Smartkarma Original looks at the evolving SRI/ESG indexing landscape, and more importantly the emergent investing (e.g., stocks of listed indexers) and trading (e.g., arbitraging index changes) strategies arising from this global boom in SRI/ESG indices... from an Original perspective.WHAT'S ORIGINAL?Typically, discussions about SRI/ESG indices focus on their performance and in the context of that age-old "ESG-Alpha" debate – i.e., whether incorporating ESG factors into the investment process is worth the effort. To be clear, that is an important debate to have (and win). However, this report takes a different angle on SRI/ESG indices by focusing on investing and trading and strategies that capitalise on the boom in SRI/ESG indices. Theory (and a little speculation) backed by analysis.

Sustainability and ESG Indices: A Booming Ecosystem and New Investing and Trading Opportunities

Market Intelligence, ORTEX

ORTEX Market Intel

Market Intelligence

Global Financial Data and Analytics Platform

ORTEX

ORTEX is a global financial data and analytics platform providing real-time securities lending and short interest data, index rebalance data, holdings and insider transactions, trading signals, corporate actions and news,  stock machine learning and factor scores and other analytics. The majority of the data are downloadable and accessible through APIs.

Equity Bottom-Up

<ul><li>Covering dominated the week ending June 27.</li><li>Several names saw short interest fall 50-70%, while a handful of fresh short positions emerged in energy, metals, and financials.</li><li>Borrow costs told a split story - tightening hard in some names, collapsing in others.</li></ul>

Covering dominated the week ending June 27.Several names saw short interest fall 50-70%, while a handful of fresh short positions emerged in energy, metals, and financials.Borrow costs told a split story - tightening hard in some names, collapsing in others.

Bears Cover, Bulls Borrow: Short Interest Week of June 22

Last week, <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> made a momentous <a href="https://www.sgx.com/media-centre/20201215-sgx-strengthens-commitment-sustainability-s20-million-plan" target="_blank" rel="noopener">announcement</a> in the sphere of Asian sustainable/ESG finance and investing. <a href="https://first.sgx.com" target="_blank" rel="noopener">SGX FIRST</a> is its new multi-partner sustainability initiative. The acronym, FIRST, is for "Future in Reshaping Sustainability Together," but it says so much more.SGX FIRST, puts SGX first, in the ranks of Asia's most sustainable stock exchanges.This is different. SGX FIRST is a well-conceived, high-level, strategic sustainability initiative on an entirely different plane than the many "platform" launches of late. It is indeed part platform, but to view it as only that misses its essence entirely. SGX FIRST stands out in three interrelated ways:<ol>
<li>
Intelligent: Unlike "me-too" ESG portals, SGX FIRST is an integrated strategic plan leveraging existing strengths, products, and relationships. It's making progress, not even a week out.</li>
<li>
Impactful: Intelligent design and synergies-galore should translate into real impact; the ability for SGX FIRST to foster and shape sustainable capital markets in Singapore, and APAC.</li>
<li>
Profitable: Yet to be seen, but likely. This is the stuff of virtuous cycles, from establishing ESG domain authority to licensing fees and other incomes. Altruistic capitalism, but capitalism.</li>
</ol>In this game of ESG "platforms," SGX is playing chess, whilst others chew on checkers.In light of pandemic-induced hard times for SGX, this may be what the doctor ordered.

Last week, Singapore Exchange (SGX SP) made a momentous announcement in the sphere of Asian sustainable/ESG finance and investing. SGX FIRST is its new multi-partner sustainability initiative. The acronym, FIRST, is for "Future in Reshaping Sustainability Together," but it says so much more.SGX FIRST, puts SGX first, in the ranks of Asia's most sustainable stock exchanges.This is different. SGX FIRST is a well-conceived, high-level, strategic sustainability initiative on an entirely different plane than the many "platform" launches of late. It is indeed part platform, but to view it as only that misses its essence entirely. SGX FIRST stands out in three interrelated ways:

Intelligent: Unlike "me-too" ESG portals, SGX FIRST is an integrated strategic plan leveraging existing strengths, products, and relationships. It's making progress, not even a week out.

Impactful: Intelligent design and synergies-galore should translate into real impact; the ability for SGX FIRST to foster and shape sustainable capital markets in Singapore, and APAC.

Profitable: Yet to be seen, but likely. This is the stuff of virtuous cycles, from establishing ESG domain authority to licensing fees and other incomes. Altruistic capitalism, but capitalism.
In this game of ESG "platforms," SGX is playing chess, whilst others chew on checkers.In light of pandemic-induced hard times for SGX, this may be what the doctor ordered.

SGX FIRST Puts SGX First in the Ranks of Asia's Most Sustainable Stock Exchanges

United States

Nasdaq, Inc. operates a global stock exchange. The Company provides trading, clearing, exchange technology, regulatory, securities listing, and information services. Nasdaq offers its services worldwide.

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Nasdaq Inc (NDAQ US)

Asana and Twilio Are First Listings for ESG-Focused Long-Term Stock Exchange (LTSE)

Long-Term Stock Exchange just landed its first two listings, Asana and Twilio. It's a major milestone for this new ESG-focused exchange.

Kyle Rudden

Weekly Innovation Review (WIRE) #41

Headline Developments: Steam , the video game distribution platform owned by Valve (private), has released the long-rumoured handheld gaming device...

Granite Bay Capital

Sustainability and ESG Indices: A Booming Ecosystem and New Investing and Trading Opportunities

Index rebalancing and reconstitution often creates a window of abnormal returns (and opportunity). For broad market indices, these effects are well...

Kyle Rudden

Bears Cover, Bulls Borrow: Short Interest Week of June 22

Covering dominated the week ending June 27. Several names saw short interest fall 50-70%, while a handful of fresh short positions emerged in...

ORTEX Market Intel

SGX FIRST Puts SGX First in the Ranks of Asia's Most Sustainable Stock Exchanges

"What's in a name? "asked Shakespeare. Quite a lot, when the name "SGX FIRST." FIRST is an acronym, but it also makes a bold statement; that SGX is...

Kyle Rudden

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