- Asian equity market activity marked by return of investor risk appetite
- Increased risk management in EM Asia currencies, commodities
Singapore Exchange (SGX) today released its market statistics for October 2019. Asian equity market activity was marked broadly by a return of investor risk appetite during the month, amid signs of progress in U.S.-China trade negotiations and easing uncertainties over the path ahead for Brexit.
Total securities market turnover value on SGX rose to S$21.6 billion in October, rebounding by 9% month-on-month (m-o-m). Securities daily average value climbed 4% m-o-m to S$980 million while market turnover value for exchange-traded funds (ETFs) surged 55% m-o-m to S$236 million.
With a tentative agreement for a “first phase” trade deal between Beijing and Washington, and the resumption of trading following a weeklong national holiday in China, investors showed renewed appetite for regional stocks. The benchmark Straits Times Index (STI) was up 4% in October, tracking increases in Japan and Taiwan indices and taking its 10-month total return to 9%. Keppel Corporation, Sembcorp Industries, CDL Hospitality Trusts, Jardine Cycle & Carriage and Genting Singapore were among the top gainers for the month.
Amid active cash equities markets, risk management activity among SGX’s broad suite of equity derivatives was mixed. Total equity-index futures traded volume on SGX declined 14% m-o-m to 12.2 million contracts in October, with Nikkei 225 Index Futures volume sliding 14% m-o-m. MSCI Singapore and MSCI Taiwan Index Futures remained strong performers, climbing 15% and 12% m-o-m, respectively.
During the month, Lendlease Global Commercial REIT raised S$740.3 million in its IPO, while secondary equity fundraising activity on SGX amounted to S$1 billion. For the calendar year-to-date through October, primary fundraising on the exchange topped S$3.1 billion – up 50% from the full-year total for 2018 – while secondary fundraising reached S$6.4 billion, surpassing last year’s tally by 5%.
SGX, Asia’s biggest listing venue for international debt securities, remained a leading platform for listings of sustainability and green bonds. CIMB Bank Berhad issued a US$680 million Sustainable Development Goals Bond, while Shinhan Bank issued a EUR500 million green bond in October.
EM Currencies, Commodities
As the U.S. Federal Reserve signalled further interest rate cuts were unlikely this year, following another round of reductions late in October, the U.S. dollar fell against Emerging Market (EM) currencies amid reduced volatility in foreign exchange (FX) markets. SGX USD/CNH Futures increased 43% year-on-year (y-o-y) to 634,737 contracts in October, leading total FX futures on the exchange up 11% y-o-y at 1.85 million contracts.
While a weaker greenback fuelled price swings in dollar-denominated commodities, SGX continued to offer a robust risk-management service. Iron ore derivatives volume gained 6% y-o-y to 1.27 million contracts in October, lifting total commodity derivatives volume up 1% y-o-y at 1.49 million contracts.
Notably, October was a record month for SGX’s pioneering high-grade (65% Fe fines) iron ore contracts with almost 4 million metric tonnes changing hands, amid broadening demand from physical and financial investors. Forward freight derivatives volume jumped 11% m-o-m to 77,227 contracts in October as SGX retained its lead as the largest clearer of drybulk freight contracts.
The full report can be found here.
