- Iron ore derivatives volume continued to rise, amid one of the most volatile periods for the industry
- Total securities market turnover increased month-on-month, as the STI outperformed global markets
Singapore Exchange (SGX) today released its market statistics for April 2019. Total derivatives traded volume rose 37% year-on-year (y-o-y) to 20.8 million contracts, as global demand for risk management across asset classes continued. Total securities market turnover by volume was up 7% month-on-month (m-o-m) to 22.9 billion shares, driven largely by real estate and consumer sectors.
Continued volatility in the commodities industry
The iron ore industry is going through one of the most volatile periods in its history, following ongoing uncertainties around supply disruptions in Brazil and Australia, as well as declining domestic stockpiles in China. These uncertainties around supply, coupled with unpredictable steel margins, are likely to keep iron ore price volatility high and continue to drive a need for steel raw materials price risk management.
The upheaval in the iron ore industry naturally also spilled into the adjacent freight space. Iron ore trade flows are the principal drivers of Capesize freight rates, and market participants are seeking to hedge freight rates to avoid an unforeseen move in the cost of moving cargo.
Against this backdrop, SGX’s overall commodity derivatives volume increased 64% y-o-y, with volumes of iron ore and freight derivatives up 73% and 53% y-o-y, respectively.
China remains a key macro theme
China continues to be in focus, as portfolio managers managed their exposures across equities and currencies. Traded volumes of SGX FTSE China A50 Index futures and SGX USD/CNH futures surged 83% and 111% y-o-y, respectively.
Amid swings across regional equity markets, the Singapore stock market was the best performing market globally in April. The Straits Times Index (STI) surpassed 3,400, generating 6.1% increase in total returns, propelled by Banks (+10.8%) and Utilities (+6.6%) sectors.
Securities daily average value (SDAV) gained 2% m-o-m to $1.05 billion, while market turnover value for Exchange Traded Funds (ETFs) rose 44% to $195 million. Notably, assets under management for STI ETFs reached a milestone in April, with fund size exceeding $1 billion.
During the month, two US-focused property trusts – ARA US Hospitality Trust and Eagle Hospitality Trust – lodged their preliminary prospectuses. Secondary equity fundraising amounted to $210.0 million.
Debt fundraising was active with 145 new bond listings raising $61.7 billion, compared to 85 bond listings raising $46.8 billion in the same period a year ago. SGX welcomed the listing of the first green bond issued by ICBC Singapore under the Belt and Road Inter-bank Regular Cooperation (BRBR) Mechanism, which is also the largest green bond from an Asian issuer so far this year.
The full report can be found here.
