- Significant growth in volumes across derivatives products, following increased demand for risk management as a result of the ongoing US-China trade war
- SGX welcomed four equity listings in May, including the third and fifth largest IPO in Asia ex-Japan year-to-date
Singapore Exchange (SGX) today released its market statistics for May 2019. The US-China trade war remains a dominant theme in global financial markets. Total derivatives traded volume grew 46% year-on-year (y-o-y) to 24.2 million contracts, as global investors managed overall Asian exposures and macro risks. Amid market uncertainty, the month of May saw broad-based declines across most Asian equity indices. In Singapore, total securities market turnover value was up 5% month-on-month (m-o-m) to $23.1 billion.
Asian risk-management in high demand
Growing fears around the US-China trade war have roiled markets globally and reduced investor tolerance for uncertainty. Investors with exposure to various Asian asset classes, particularly currency and equity, turned to SGX to manage price and risk exposures given its waterfront access to the region.
Traded volumes of SGX FTSE China A50 Index futures (+82% y-o-y), SGX MSCI Taiwan Index futures (+28% y-o-y) and SGX Nikkei 225 Index futures (+36% y-o-y) grew as institutional investors sought to manage their equity portfolios in Asia. The SGX MSCI Singapore Index (SiMSCI) futures also achieved a record month in May with over 1 million contracts traded for the first time.
Meanwhile, SGX USD/CNH Futures rose 38% month-on-month (m-o-m) and 131% y-o-y, following an already significant growth last month.
The ongoing trade war continued to keep concerns high around iron ore supply and demand. SGX iron ore derivatives volumes surged 87% y-o-y, reaching 1.9 million contracts traded in May, while freight derivatives were up 54% y-o-y. Overall SGX commodity derivatives volume increased 78% y-o-y to over 2.2 million contracts.
Continued fundraising activity
Against a backdrop of market volatility, defensive sectors like Communication Services, REITs and Consumer Staples were the top net buy sectors for institutional investors in May. Communication Services (+0.6% total returns) and REITs (+0.4%) were the only sectors with positive returns. Total share buyback consideration in May also hit a 9-month high, totalling $123.1 million.
For the first five months of 2019, IT was the best sector generating 18.2% in total returns, followed by REITs (+13.9%), Utilities (12.5%) and Consumer Staples (+10.3%).
Securities daily average value (SDAV) declined 18% y-o-y in May but gained 5% m-o-m to $1.1 billion. Market turnover value of structured warrants and daily leverage certificates also decreased 42% y-o-y, but rose 56% m-o-m to $814 million.
Fundraising activities were high during the month with four equity listings raising close to $1.5 billion. According to Dealogic, Eagle Hospitality Trust and ARA US Hospitality Trust were the third and fifth largest IPO in Asia ex-Japan in 2019, year-to-date.
In terms of debt fundraising, there were 39 bond listings raising $13.2 billion. SGX welcomed the listing of a US$300-million first-of-its-kind sustainability bond in Korea, issued by Mirae Asset Daewoo.
The full report can be found here.