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- Derivative volume rises on increased risk-management activity
- ETF turnover climbs to highest since March 2020
Singapore Exchange (SGX) today released its market statistics for July 2021. Declines in several Asian stock markets during the month bolstered equity risk management among institutional investors, while hedging demand fueled volumes in currency and commodity derivatives.
Derivatives total traded volume on SGX rose 8% month-on-month (m-o-m) in July to 20.4 million contracts, the highest in four months. SGX’s shelf of pan-Asia benchmark equity derivatives increased 13% m-o-m to 15.2 million contracts, with MSCI Singapore Index Futures gaining 23% m-o-m. SGX FTSE China A50 Index Futures volume climbed 19%, SGX FTSE Taiwan Index Futures advanced 5%, while SGX Nifty 50 Index Futures were up 7%.
Foreign exchange (FX) trading activity on SGX rose sharply on a year-on-year (y-o-y) basis as participants hedged against the U.S. dollar’s strength. Total FX futures volume increased 30% y-o-y in July to 2.2 million contracts, led by a 38% y-o-y gain in SGX INR/USD Futures on signs of inflationary pressure in India. SGX USD/CNH Futures – the world’s most widely traded international RMB futures contract – climbed 20% y-o-y on uncertainty over the impact of China’s regulatory reforms in the domestic economy.
During the month, SGX announced it will fully acquire FX trading platform MaxxTrader, further extending its reach into the over-the-counter (OTC) space. SGX is building an integrated FX ecosystem and marketplace to facilitate global access to OTC and on-exchange currency derivatives.
Broad-Based Gains in Commodities
Hedging demand underpinned broad-based gains across SGX’s commodity derivatives franchise, with total volume rising 9% y-o-y in July to 2.3 million contracts. Iron ore derivatives increased 5% y-o-y to 1.9 million amid a surge in volatility, with prices falling below US$200 a metric tonne. Open interest in high-grade 65% Fines Fe contracts achieved another monthly record high.
Forward freight agreement (FFA) volume on SGX climbed 36% y-o-y in July to 139,893 contracts. During the month, the exchange introduced three new FFA and futures for liquified natural gas (LNG) vessels. The contracts, referencing the Baltic Exchange’s independent freight assessments, expanded SGX’s clearing services for seaborne freight.
SGX’s petrochemicals suite saw growing traction on the back of increased risk-management activity. Petrochemicals volume jumped 126% y-o-y in July to 4,609 contracts, with open interest notching another monthly record. SGX SICOM rubber futures – the global pricing bellwether for natural rubber – added 9% y-o-y to a three-month high of 125,719 contracts.
Strong ETF Turnover
In Singapore, the total market turnover value of exchange-traded funds (ETF) on SGX surged 50% m-o-m in July to S$563 million, the highest since March 2020. Volumes in the Lion-OCBC Securities Hang Seng TECH ETF was almost four times higher on growth in client participation. Straits Times Index (STI) ETFs and fixed income ETFs, in particular the Nikko AM SGD Investment Grade Corporate Bond ETF and iShares Barclays Capital USD Asia High Yield Bond Index ETF, also performed strongly.
The STI rebounded 1.2% in July to 3,166.94, bringing its price gain over the first seven months of 2021 to 11.4%, with dividends boosting the total return to 13.2%. This ranked the STI among the top three performing Asia-Pacific benchmarks year-to-date, alongside the TAIEX and Nifty 50.
The amount issued from 80 new bond listings on SGX, Asia’s leading international bond marketplace, increased 11% y-o-y in July to S$45 billion, the highest in four months.
The full market statistics report can be found here.
