SINGAPORE: Derivatives volume hit record high during first quarter of 2019 at Singapore Exchange (SGX), reaching daily average volume of more than 1 million contracts per quarter for the first time.

Securities daily average value rose compared to preceding quarter, led by higher turnover in IT and REIT sectors.

Singapore Exchange (SGX) released its market statistics for March 2019. Risk management was a major theme during the month, with commodity supply disruptions in Brazil and Australia spurring hedging demand for iron ore. Positive investor sentiment also drove market activity, with SGX’s equity-index futures volume achieving a record high of 18.6 million contracts in March, as portfolio investors managed their exposure to the Chinese and Japanese stock benchmarks.

SGX’s derivatives volume marked a record first quarter, with a daily average of more than 1 million contracts changing hands per quarter for the first time.

A combination of easing trade tensions and the end of Fed’s current rate hike cycle supported regional equity markets. Securities daily average value (SDAV) for the first quarter rose 5% compared to the preceding three months, as investor interest in IT stocks and REITs increased.

In particular, Singapore’s REIT sector was buoyed by the change in the outlook for global interest rates. Top performing sectors for the quarter included IT chalking up 28.6% increase in total returns, followed by Consumer Staples (+13.9%) and REITs (+12.9%).

Risk-management demand:

Total derivatives volume in March gained 28% month-on-month (m-o-m) and 34% year-on-year (y-o-y), signaling resilience in demand for risk management even as global market volatility slowed. In the commodities space, supply fundamentals prompted both physical and financial participants to cover their positions. Brazil’s iron ore supply disruption, coupled with the impact of Cyclone Veronica on Australia’s output, boosted SGX iron ore derivatives volume by 26% m-o-m to 1.48 million contracts.

Petrochemical volumes rose 90% m-o-m in March and 155% y-o-y to 622,000 MT, with multiple record volumes registered for Benzene (BZ), Styrene Monomer (SM) and the PX-Naphtha spread (PXN) contracts. BZ and SM combined volumes climbed following increased price volatility stemming from a chemical plant blast in Yancheng city in China on 21 March.

Positive Investor Sentiment:

Ahead of India’s general elections, SGX INR/USD Futures volume gained 17% m-o-m in March, with open interest surging 107% on the back of a net inflow from foreign portfolio investors. Aggregate FX futures open interest grew 42% m-o-m to 124,083 contracts, while volume increased 17% to 1.88 million – a record high.

Total Securities market turnover value rose 13% m-o-m in March to S$21.6 billion, with Securities daily average value (SDAV) at S$1.03 billion. By sector performance, IT, REITs and Real Estate (excluding REITs) were the top performers, with combined returns outpacing the overall Singapore stock market in March.

Exchange Traded Funds (ETFs) continued to be active with market turnover value of S$135 million. Market turnover value of structured warrants and Daily Leveraged Certificates (DLCs) was S$635 million, with trading activity dominated by SGX’s new Single Stock DLCs comprising large-cap Singapore and Hong Kong stocks.

During the month, S$25.4 million of primary equity funds were raised by three new Catalist companies – Sim Leisure Group Limited, Reclaims Global Limited and Fortress Minerals Limited. Secondary equity fundraising amounted to S$312.7 million. In terms of new debt fundraising, there were 122 bond listings, raising S$65.2 billion in March, compared to 100 new bond listings in February raising S$42.9 million.[the_ad id=”31605″]