Speech By Michael Syn, Head Of Equities, Singapore Exchange, Invest Singapore 2020 Summit

Introduction

Good morning and welcome to this virtual Invest Singapore 2020 summit. Singapore Exchange is pleased to partner with CGS-CIMB to bring to you one of the largest investment forums, and to wrap up a most extraordinary year for investors.

Asia is poised to survive, sustain and succeed

I am sure there will be lots of discussion today on how COVID may play out from here – the availability of vaccines, the resumption of cross-border travel, what the most meaningful changes in society and economy may be. There is also, of course, going to be sustained attention on U.S.-China relations. The U.S. presidential elections are not over! Depending on the eventual balance of economic and political power, I think it is fair to say that question marks linger over the China engagement factor, and sitting here in Singapore we will be particularly sensitive to sea changes in global trade and political risk premium.
An important piece of news that emerged over the weekend was the inking of the Regional Comprehensive Economic Partnership or RCEP, after eight years of negotiation. This is the world’s largest trade pact covering 30% of global GDP, comprising all 10 ASEAN members including Singapore, and backed by China and four other key partners Japan, Korea, Australia and New Zealand. It will take a while for the ratification process, but many are already pinning their hopes on RCEP to both catalyse and remove frictions from an economic recovery.
Even though the headlines seem to suggest that the U.S. and China are all that matter in today’s global economy, one must not forget that there are over 40 countries in Asia. Asia is about far more than just competition between these two super powers. Even as a concept, Asia is a huge, complex and always-evolving organism. Understanding the trade patterns, capital dynamics and various nuances between Asian countries will become more important in a post-pandemic, post-RCEP world. Singapore is classified a Developed Market, while much around us are defined as Emerging Markets. A practical definition of an Emerging Market is one where politics matters at least as much as economics.
So the theme of today’s summit is apt. For sure, Asia as a whole is poised to “survive, sustain and succeed” in the post-COVID world. So the question is how we, as investors, can manage market risks and seize opportunities. Let me touch on these three.

Survive: Flight-to-quality

At the start of the lockdowns, investors were, in every sense of the word, focused on ‘surviving’. From an investment and risk-management perspective, investors were looking for safe havens like Singapore.
Singapore may not have a big stock market, but quality and sophistication make up for size. In the early days of the pandemic, we kept our markets uninterrupted and accessible. You may recall, back then there were calls to ban short sellers, while some regional Asian markets were shut altogether.
As an exchange and clearinghouse, the volatility on our platforms had been lower than elsewhere. Our dynamic circuit breakers ensured orderliness of trading and worked as intended through the surge in trading activity and volume.

Global markets have calmed down relatively since. As much as investors want to be able to invest in highly liquid exciting stocks, they also want a safe harbour for their wealth and investments. So we do what we need to, we play to our strengths which is in tune with what investors want.

Sustain: Search for yield

Now, investors, have in a way moved past ‘survival’ and have been thinking of how best to ‘sustain’ their investments. We are in a long-term environment of low or even negative interest rates. More so than ever before, investors like yourselves are actively searching for broad and efficient access to yield.
We have seen this play out in SGX’s ETF market, especially in yield-focused ETFs, which have grown considerably. In the first 10 months of this year, trading turnover in ETFs increased by almost 150% year-on-year.
This activity is not just among institutional investors, but also among retail investors – many of whom are seeking low-cost and more efficient passive investments. The recent growth in robo-advisors and regular savings plan providers has also contributed to the momentum.
Since the start of 2020, more investors have chosen to use ETFs tracking the Straits Times Index, as a vehicle to gain instant exposure to the top 30 Singapore blue chips. Actually, the interest in ETFs spans beyond Singapore and beyond equities, and across to other asset classes like fixed income and REITs.
You will have heard about the listing of the world’s largest Chinese pure government bond ETF on SGX. The fund is huge, with US$1.1 billion raised within two months of its listing in September.
And then there is listed real estate – Asians love property. In Singapore, there is a strong concentration of REITs, given our ecosystem of investors, issuers and managers built up over the years. REIT ETFs have been very popular with our regional customers: from Korea, Taiwan, China and ASEAN.
To offer investors more options to diversify their investment portfolios, we are building a pipeline of new ETF listings that covers equities and fixed income asset classes.

Succeed: Customer choice

How can investors ‘succeed’ in this challenging environment? SGX has been working with partners and issuers to develop an up-to-date and distinctive suite of multi-asset products that we hope investors can benefit from.
Aside from a broad product offering, we also work with industry experts like CGS-CIMB and SmartKarma to share their investment insights and opinions. Today’s forum is one such example where experts will shed more light on investment opportunities in REITs, healthcare and the digital-transformation sector.
COVID-19 is the crisis of a generation. But investors can have the confidence to survive, sustain and succeed against the crisis… because we are in Asia – right at the heart of where COVID was successfully managed, economic recovery is beginning and where future growth surely lies. So you do not need to look far afield; the opportunities are right in our backyard.
With this, I wish you every success in your investment journey.