◾ Active risk management and strong financial participation in iron ore bolster commodity derivatives volumes
◾ Equity market activity buoyant; secondary fund-raising continues
Singapore Exchange (SGX Group) today released its market statistics for May 2023. Activity in the commodities and equities markets was buoyant versus April levels. Total derivatives traded volume in May was up 16% month-on-month (m-o-m) at 20.5 million contracts, while total securities market turnover value rose 23% m-o-m to reach S$23.0 billion.
Iron ore’s continued financialisation and growing risk management demand
Commodity derivatives volume rose 13% m-o-m and 55% year-on-year (y-o-y) to 3.8 million contracts as demand for risk management grew. Financial client activity continued to increase as iron ore gains recognition as a proxy for industrialising Asia. This brought SGX Commodities’ iron ore daily average volume on-screen to a new record. Total iron ore derivatives traded volume was up 9% m-o-m and jumped 54% y-o-y to more than 3.2 million contracts. The Shanghai Rebar Futures contract, launched in October 2022 as part of SGX Commodities’ ‘Virtual Steel Mill’, saw daily average volume soar 133% m-o-m as adoption continued to rise.
Amid volatile freight rates, dry bulk forward freight agreements (FFA) volume rose 63% m-o-m
to 217,580 contracts. With China’s reopening, there was increased activity from market participants, bringing the volume of SGX SICOM rubber futures – the global pricing bellwether for natural rubber – to 205,475 contracts, up 20% m-o-m.
FX hedging intensifies
Market volatility ensued in May as negotiations for a US debt ceiling deal intensified. Total FX futures traded volume on SGX FX grew 20% m-o-m to reach 2.9 million contracts. Volume of SGX USD/CNH Futures, the world’s most widely traded international renminbi futures, rose 19% m-o-m in May to almost 1.8 million contracts as economic data and monetary policy decisions led to increased hedging activities.
Broad-based activity across equity index futures
May saw a divergence in Asian equity market performances. Japan and Taiwan equities were boosted by an improvement in investor sentiment towards the semiconductor sector while the China equities market saw a decline. Risk management and trading activities were consequently elevated. These plus a higher number of trading days in May led to SGX Equity Derivatives’ total traded equity index futures volumes rising 16% m-o-m to 13.3 million contracts.
SGX FTSE Taiwan Index Futures traded 1.5 million contracts, up 37% m-o-m. Open interest of SGX FTSE Taiwan Index Futures rose by 61% m-o-m, achieving a month-end record of 150,180 lots (US$8.6 billion), reflecting institutional players’ preference for SGX Equity Derivatives as the venue of choice.
SGX FTSE China A50 Index Futures – the world’s most liquid international futures contract for Chinese equities – saw volume rise 11% m-o-m to 7.4 million contracts. SGX Nikkei 225 Index Futures volume rose 42% m-o-m to 1.0 million contracts.
SGX Securities’ securities daily average value (SDAV) during the month was up 7% m-o-m to $1.0 billion, even as the Straits Times Index ended May down 3.4% m-o-m.
Technology is still the strongest sector in the global stock market, as well as the Asia-Pacific stock market so far this year, with the Lion-OCBC Securities Hang Seng TECH ETF the most traded Singapore-listed ETF in the month of May.
Singapore Depository Receipts (SDRs) for three Thai blue chips – Airports of Thailand (AOT), CP All (CPALL) and PTT Exploration & Production (PTTEP) – began trading on 30 May as part of the Thailand-Singapore DR linkage with The Stock Exchange of Thailand. Also joining the Singapore securities market was Ever Glory United Holdings which listed on Catalist. Secondary funds raised grew 14% m-o-m led by CapitaLand Ascendas REIT’s private placement of new units to fund its acquisitions. SGX Group also signed an MOU in May with the Shanghai Stock Exchange to launch an ETF link between Singapore and China.
On SGX Fixed Income, Asia’s leading international bond marketplace, the amount issued from 104 new bond listings amounted to S$27.3 billion in May. Highlights included the Export-Import Bank of China’s US$1.5 billion three-year senior bond, Japan International Cooperation Agency’s US$1.25 billion five-year sustainability bond and Sydney Airport Finance Company’s EUR1 billion 10-year bond.
The full market statistics report can be found here.