STI ETF In Focus As Singapore Equity Market Rebounds

• In line with the rally in regional equity markets, Singapore’s benchmark Straits Times Index (STI) has gained almost 11% over the last four weeks, recouping nearly all its losses since the start of the year.
• Reflecting the recovery in Singapore stocks, the SPDR® Straits Times Index ETF was the most active ETF in the month-to-date and the second-most active ETF in the 2016 year-to-date.
• Global equity markets are also rebounding. The MSCI All Country World Index – which comprises stocks from both developed and emerging markets – has recovered more than half this year’s losses since falling to a 2 ½-year low on 11 February, buoyed by improving US economic data and increased stimulus in China.

In line with the rally in regional equity markets, Singapore’s benchmark Straits Times Index (STI) has gained almost 11% over the last four weeks, recouping nearly all its losses since the start of the year.

The STI rose as much as 1.7% on Friday morning to 2,834.66, near its close of 2,882.73 on 31 December 2015. This narrows the Index’s negative total return in the year-to-date to 1.7%.

Reflecting the recovery in Singapore stocks, the SPDR® Straits Times Index ETF was the most active ETF in the month-to-date and the second-most active ETF in the 2016 year-to-date.

Asian shares and oil both jumped to eight-week highs on Friday on the prospect of further monetary stimulus in China and as crude producers mull output curbs.

Key OPEC members intend to meet with other producers in Russia on 20 March to renew talks on an agreement to freeze output.

Chinese shares have gained this week ahead of the Saturday start of the National People’s Congress, where delegates are expected to approve a new five-year economic plan. Investors are anticipating that policy makers will unveil more measures to boost growth at these meetings.

On Monday evening, the People’s Bank of China cut the required reserve ratio for lenders by 0.5 percentage point, the fifth such move in a year.

Both the Hang Seng China Enterprises Index and the Shanghai Composite Index rose for the fourth straight day on Friday, while Japan’s Topix Index capped its best three-week rally since November 2014. India’s Sensex Index is also set for its biggest weekly advance in four years.

Global equity markets are also on the upswing as risk appetites increased. The MSCI All Country World Index, which comprises stocks from both developed and emerging markets, have recovered more than half this year’s losses since falling to a 2 1/2-year low on 11 February, buoyed by improving US economic data and increased stimulus in China.

Meanwhile, investors are scouring US economic releases to assess the likely trajectory of interest-rate hikes ahead of the next Federal Open Market Committee meeting on 15-16 March.

The US non-farm payrolls report due later is forecast to show hiring picked up in February, while wage gains slowed from the fastest pace in a year. Recent data also showed that US factory activity in February shrank less than economists projected, while spending on construction projects rose most since May.

Month-to-Date Performances

The 10 most active ETFs on SGX in the month-to-date are SPDR® Straits Times Index ETF, db x-trackers Markit iBoxx ABF Korea Government UCITS ETF, iShares MSCI India Index ETF, SPDR® Gold Shares, iShares J.P. Morgan USD Asia Credit Bond Index ETF, db x-trackers MSCI Thailand Index UCITS ETF (DR), db x-trackers CSI 300 UCITS ETF, db x-trackers MSCI China Index UCITS ETF (DR), db x-trackers FTSE China 50 UCITS ETF (DR) and db x-trackers S&P 500 UCITS ETF.

In the month thus far, these 10 most active ETFs averaged a 2.9% gain in total return, taking the one-year and three-year total returns to -11.4 % and 3.0% respectively. The three best performers in terms of month-to-date total returns are iShares MSCI India Index ETF, db x-trackers CSI 300 UCITS ETF and db x-trackers FTSE China 50 UCITS ETF (DR).

The above-mentioned ETFs saw a 30% YoY decrease in turnover for the month thus far, declining from S$53.7 million in the March 2015 month-to-date to S$37.7 million in the same period this year. This brings the total 12-month turnover to S$1.9 billion.

The three most active ETFs in the month thus far were SPDR® Straits Times Index ETF, db x-trackers Markit iBoxx ABF Korea Government UCITS ETF and iShares MSCI India Index ETF.

The 10 most active ETFs in the March 2016 month-to-date are detailed below and sorted by MTD turnover.

Source: SGX (data as of 3 March 2016)

Source: SGX (data as of 3 March 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.