The Singapore Exchange (SGX) plans to launch futures contracts on Asian sovereign bonds in the coming weeks to meet rising demand for hedging tools amid geopolitical tensions and market volatility. According to its chief executive, Loh Boon Chye, these derivatives would allow international investors exposed to Asian economies to better manage the risk linked to interest-rate fluctuations.

The move comes as global bond markets face heavy selling, driven by fears that the conflict in the Middle East could reignite inflation and prompt central banks to keep monetary policy tighter for longer. Bond futures are widely used to hedge against rate moves, boost returns or speculate on price changes without directly holding the securities.

The project is part of a broader strategy to expand derivatives products in Singapore. SGX recently said it intended to launch perpetual futures contracts on bitcoin and ether. In parallel, Asian bonds continue to draw foreign capital, with net purchases of $3.78bn in January across several regional markets, despite a slowdown from the $8.07bn recorded in December.