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- Market volatility as well as an uncertain global growth outlook have boosted the appeal of gold as a store of value and haven asset. Fund flows into gold have sent the price of bullion up 25% in the year thus far.
- Turnover in SPDR® Gold Shares ETF has also jumped more than seven-fold, rising to S$74.0 million in the July 2016 month-to-date from S$10.0 million in the year-ago period. SGX hosts the most liquid Gold ETF in Asia with bid-ask spreads of 6bps.
- Gold gained ahead of and after Britain’s 23 June referendum on its European Union membership, closing above the US$1,300/oz level on 24 June after the Brexit vote. Although gold has held above the US$1,300/oz mark since then, the metal pared gains this week after risk appetites rebounded and US stocks set record highs.
Market volatility as well as an uncertain global growth outlook have boosted the appeal of gold as a store of value and haven asset. Fund flows into gold have sent the price of bullion up 25% in the year thus far.
Turnover in SPDR® Gold Shares ETF has also jumped more than seven-fold, rising to S$74.0 million in the July 2016 month-to-date from S$10.0 million in the year-ago period. SGX hosts the most liquid Gold ETF in Asia with bid-ask spreads of 6bps.
Gold gained ahead of and after Britain’s 23 June referendum on its European Union membership, closing above the US$1,300/oz level on 24 June after the Brexit vote. Although gold has held above the US$1,300/oz mark since then, the metal pared gains this week after risk appetites rebounded and US stocks set record highs.
The S&P 500 Index extended its all-time high yesterday, marking its longest winning streak in four months, while the Nasdaq Composite Index jumped to a more than six-month high. The Dow Jones Industrial Average also closed at a record high earlier this week.
Major equity markets were buoyed by expectations of looser monetary policy. While the Bank of England kept interest rates steady at a record low on Thursday – its first rate decision since the Brexit vote – central bank governor Mark Carney said easing would probably be needed over the summer. The European Central Bank will also hold its first scheduled monetary policy meeting since Brexit next Thursday. A victory for the ruling party in Japan last Sunday has also cleared the way for increased fiscal stimulus in the world’s third-largest economy.
US interest rates may also remain low for the rest of the year. Investors expect a less than 5% chance of a rate increase in July, according to pricing in fed funds futures contracts. However, odds of a Federal Reserve hike by December are back to 35%, after falling to around 8% following the UK’s June 23 referendum. Fed officials are expected to review the implications of Brexit at their next policy-setting meeting on July 26-27.
Month-to-Date Performances
The 10 most active ETFs on SGX in the month of July thus far were SPDR® Gold Shares, iShares MSCI India Index ETF, SPDR® Straits Times Index ETF, CIMB FTSE ASEAN40 ETF, db x-trackers MSCI Indonesia Index UCITS ETF, db x-trackers FTSE China 50 UCITS ETF (DR), db x-trackers MSCI Taiwan Index UCITS ETF (DR), db x-trackers MSCI Thailand Index UCITS ETF (DR), db x-trackers FTSE Vietnam UCITS ETF, and db x-trackers CNX Nifty UCITS ETF.
In the month of July thus far, these 10 most active ETFs averaged a total return of 3.2%, taking the one-year and three-year total returns to -4.1% and 12.0% respectively. The three best performers in terms of month-to-date total returns were db x-trackers FTSE Vietnam UCITS ETF, db x-trackers MSCI Indonesia Index UCITS ETF, and db x-trackers MSCI Taiwan Index UCITS ETF (DR).
The above-mentioned ETFs saw a 153.2% YoY increase in turnover for the month thus far, increasing from S$52.1 million in the first 10 sessions of July 2015 to S$131.9 million in the same period this year. This brings the total 12-month turnover to S$1.9 billion.
The three most active ETFs over the month of July thus far were SPDR® Gold Shares, iShares MSCI India Index ETF, and SPDR® Straits Times Index ETF.
The 10 most active ETFs in July 2016 thus far are detailed below in Singapore dollars and sorted by MTD turnover.
Source: SGX, Bloomberg & SGX StockFacts (data as of 14 Jul 2016)
Source: SGX, Bloomberg & SGX StockFacts (data as of 14 Jul 2016) |
ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.
