Continued demand for Asian risk management and trading solutions

SINGAPORE: Singapore Exchange (SGX) Tuesday released its market statistics for June 2019. Significant political events have shaped sentiment across emerging Asian markets in recent months, supporting demand for Asian risk management and trading solutions as investors continually readjust their portfolios.

Total derivatives traded volume increased 17% year-on-year (y-o-y) but declined 14% month-on-month (m-o-m) to 20.8 million contracts. Total securities market turnover value in Singapore dipped 5% month-on-month (m-o-m) to $21.9 billion, while securities daily average value (SDAV) gained 5% to $1.2 billion.

SGX is the only exchange in Asia to offer futures contracts on both price return and net total return (NTR) versions of MSCI’s equity indices, covering close to 100% of Asia-Pacific’s GDP. Notably, SGX’s suite of MSCI NTR futures – which captures dividends paid by stocks composing the indices – set new records in June as institutional demand for Asian risk management and trading solutions continued.

In June, volumes of SGX’s portfolio of NTR futures grew almost twice y-o-y, registering a new monthly volume record of 1.4 million lots with open interest hitting a record high of 1.0 million lots on 20 June 2019. MSCI EM Asia, MSCI China, MSCI Japan, MSCI India and MSCI Taiwan were among the most actively traded contracts. MSCI EM Asia contract, in particular, attracted approximately US$8 billion in notional open interest, growing 3.4-times y-o-y.

While analysts expect varied market reactions to the US-China trade situation to continue in the short term, China’s growth remains a secular driver and long-term opportunity for investors. Against this backdrop, volume of SGX’s USD/CNH futures climbed closer to the 1 million traded mark in June, with an increase of 10% m-o-m and 113% y-o-y.

Asian equity markets saw broad gains in June on improved market sentiment following a global sell-off in May, with MSCI Singapore Index (SiMSCI) coming in as the top performing index. The Straits Times Index (STI) recovered 6.5% in June, bringing STI total return for the first six months of 2019 to 10.5%.

All sectors registered gains in the month of June, with Communications, Banks and Technology stocks leading the broader market. REITs, Communications Services and Industrials sectors drove institutional investors net buying activities.  The top net sell sectors were Financials, Consumer Discretionary, and Healthcare.

Market turnover value of exchange traded funds (ETFs) increased 17% m-o-m to $205 million, while the market turnover value of structured warrants and daily leverage certificates (DLCs) declined 2% to $801 million. Outstanding value of DLCs grew five times y-o-y to $15 million in June 2019, on the back of growing market participation. There are now 75 DLCs, including 56 single stock DLCs.

In June, SGX welcomed two equity listings on Catalist – home-grown interactive technology company REVEZ Corporation Ltd. and green-technology company with a US customer base, TrickleStar Limited, bringing SGX’s technology sector to a total of 84 companies with combined market capitalisation in excess of US$60 billion.

Total funds raised through bond listings more than doubled, growing 102% m-o-m and 132% y-o-y to $26.8 billion. There were a total of 53 bond listings in June 2019, an increase of 33% y-o-y. Amongst the new bond listings were four sustainability bonds issued by Korea Electric Power Corporation, Landsea Green Group Co., Ltd., Republic of Korea and Korea Housing Finance Corporation.

Following the successful issuance of Astrea IV PE retail bonds last year, the Astrea V PE Class A-1 retail bonds backed by Temasek Holdings were listed on SGX-ST Mainboard in June 2019, giving retail investors another opportunity to access private equity fund investments through a fixed income structure. The Astrea V PE Class A-2 and Class B bonds were also successfully listed on SGX’s wholesale bond market.

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