- Strong derivatives volume growth as China stimulus stokes institutional risk management
- SGX Securities is first in Asia to list Structured Certificates
Singapore Exchange (SGX Group) today released its market statistics for August 2023. Derivatives volume rose strongly as more international investors turned to SGX Group’s trusted and liquid platform to manage risk, amid China’s efforts to boost its economic recovery.
Derivatives traded volume increased 16% in August on both a month-on-month (m-o-m) and year-on-year (y-o-y) basis to 23.7 million contracts, with broad-based gains across equities, foreign exchange (FX) and commodities. Derivatives daily average volume (DAV) climbed 7% m-o-m to 1 million contracts.
Equity index futures traded volume on SGX Equity Derivatives rose 12% m-o-m in August to 14 million contracts, led by an 18% m-o-m increase in SGX FTSE China A50 Index Futures to 8.7 million contracts. Trading of the A50 futures, the world’s most liquid international futures for Chinese equities, was the third-most active on record on 28 August, following China’s decision to reduce stamp duty on securities transactions as part of its economic-stimulus measures.
GIFT Nifty 50 Index Futures traded volume gained 13% m-o-m in August to 1.6 million contracts. Open interest in the contract grew 8% m-o-m to 215,000 lots, or a notional US$8.4 billion, demonstrating confidence of global institutional investors in the quality and performance of SGX Group’s market infrastructure for GIFT City.
SGX MSCI Singapore Index Futures volume climbed 5% m-o-m in August to 1.2 million contracts, with elevated overnight T+1 activity of almost four times typical levels observed in mid-August in tandem with news flow on corporate earnings.
More FX records
Uncertainties over the outlook for interest rates drove currency risk management on SGX FX. Total FX futures traded volume rose 26% m-o-m in August to 4.2 million contracts – an all-time high – with average daily volume (ADV) hitting a record notional of almost US$12 billion.
The volume of SGX USD/CNH Futures, the world’s most widely traded international RMB futures, increased 18% m-o-m in August to almost 2.8 million contracts, also a record. SGX INR/USD Futures volume gained 11% m-o-m to 1.2 million contracts.
Fresh peaks in commodities
Commodity derivatives traded volume rose 52% y-o-y in August to 5 million contracts, an all-time high. There was broad-based growth across products, with multiple DAV records in iron ore, rubber and dairy derivatives.
Benchmark iron ore volume increased 54% y-o-y to in August 4.5 million contracts amid uncertainties in China’s property market. Financialisation continued to gain traction, with the proportion of 62% Fe Fines futures traded on-screen reaching a new record of 54.6%, even as Negotiated Large Trade (NLT) volume continued to grow. Open interest averaged 2.2 million lots – also a fresh peak.
SGX SICOM rubber futures volume climbed 51% y-o-y in August, with DAV at a record 11,504 lots, as a stronger global transportation outlook bolstered demand. The contract is the global pricing bellwether for natural rubber. Dairy derivatives set a record 78,504 lots on the back of heightened volatility, as the lowest dairy prices in three years spurred hedging.
Forward freight agreement (FFA) volume gained 29% y-o-y in August as increased financial participation drove the SGX Commodities global market share to almost 70%, while petrochemicals volume climbed 71% y-o-y.
Securities turnover grows
On SGX Securities, total market turnover value rose 10% m-o-m in August to S$23.6 billion, while securities daily average value (SDAV) increased 5% m-o-m to S$1.1 billion.
The Straits Times Index (STI) fell 4.2% m-o-m to 3,233.3. August was a heavy month for Singapore dividends, with more than 100 stocks going ex-dividend. For the first eight months of the year, the STI’s total return stands at 3.8%. The Singapore stock market saw net institutional inflow of S$408 million and net retail inflow of S$600 million in August.
During the month, SGX Securities welcomed the listing of CGS Fullgoal Vietnam 30 Sector Cap Index ETF, which offers investors efficient access to a dynamic Southeast Asian market.
On 30 August, SGX Securities became the first in Asia to list Structured Certificates, providing enhanced access to a new range of products that cater to different investor profiles and needs.
SGX-listed companies continued to tap the equity capital markets in August, with secondary fundraising up 5% y-o-y at S$214.4 million.
On SGX Fixed Income, Asia’s leading international bond marketplace, the amount issued from 93 new bond listings stood at S$17.4 billion in August. Highlights included Korea Electric Power Corp.’s US$1 billion senior notes due 2026, DBS Bank Ltd.’s A$1.5 billion floating-rate Australian covered bonds due 2027 and Chile Electricity’s US$784 million notes due 2033.
The full market statistics report can be found here.
