Singapore’s link to US stocks is struggling to attract traders

[SINGAPORE] Singapore’s effort to offer trading in American stocks during Asian hours has got off to a sluggish start as rival products and wary investors keep early volumes extremely low – showing how hard it is for regional bourses to get a slice of the demand for round-the-clock US trade.

Singapore Exchange listed its first three US stocks through its Singapore Depository Receipts (SDR) programme in July, with locally denominated shares in Grab, Sea and SpaceX.

Between then and Sep 18, just S$2.3 million in SpaceX SDRs changed hands. This is a small fraction of the roughly S$2 billion (US$1.6 billion) in average daily SGX turnover and some US$336.6 billion in SpaceX stock traded on the Nasdaq, going by Reuters’ calculations.

The entirety of trading in SpaceX since its listing in Singapore represents 0.0007 per cent of its total in the US during the same period, Reuters calculated.

A total of around S$24 million in Grab and Sea SDRs was traded in the period, compared with US$26 billion in the US.

Singapore’s SDR programme, launched in 2023, is one of several parts of a broader bid to boost an equities market that has long lagged the city’s standing as one of Asia’s most dynamic financial centres.

SGX has said the 38 SDR listings, which also include Thai, Indonesian and Hong Kong stocks, offer access to global companies during Asian hours and are not aimed at replicating volumes in their home markets.

Still, the lack of investor interest thus far has left liquidity low, and underscores the challenge facing Singapore and regional bourses as global exchanges prepare to trade round the clock.

The SDR roll-out was “anticlimactic”, said Chris Forbes, head of Asia and Middle East at CMC Markets in Singapore.

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“They’re too late to the party ... Everyone else has developed alternatives,” he said.

Globally, strong interest in US equities has driven brokers, exchanges and cryptocurrency firms to offer derivatives and other products promising round-the-clock US stock trading.

Nasdaq and NYSE Arca are readying a Dec 6 launch for a 24-hour trading programme, and the London Stock Exchange expects to launch its own in the first half of next year.

Grab and Sea declined to comment on their SDRs, while SpaceX did not respond to requests for comment. The companies were not directly involved in the SDR launches.

Luke Lim, managing director at Singapore brokerage Phillip Securities, the issuer designated by SGX to create SDRs by owning the underlying stock in trust and selling local units to the public, expects to launch more.

Carmen Lee, the head of equity research at OCBC, said local investors are usually more familiar with firms that are locally listed.

“Many investors in Singapore still not quite familiar with SDRs,” she said, adding that they are also not included in benchmarks like the Straits Times Index or MSCI’s indexes. REUTERS