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SGX derivatives traded volume surges 46% in May on trade-war woes; daily securities traded value down 18%

THE total volume of derivatives traded on the Singapore Exchange (SGX) grew 46 per cent from a year ago to 24.2 million contracts in May this year, as global investors sought to manage their overall Asian exposures and macro risks, according to the SGX’s latest market statistics released on Monday.

There were also broad-based declines across most Asian equity indices amid the market uncertainty.

The daily average traded value of securities fell 18 per cent from a year ago in May to S$1.1 billion.

Market turnover value of structured warrants and daily leverage certificates also slumped 42 per cent year on year to S$814 million.

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In Singapore, the total securities market turnover value in May rose 5 per cent from April to S$23.1 billion.

As fears from the US-China trade war roiled global markets and reduced investor tolerance for uncertainty, investors with exposure to Asian asset classes – particularly currency and equity – managed their price and risk exposures on SGX, the bourse operator said.

Trading volumes of SGX FTSE China A50 Index futures spiked 82 per cent year on year in May, while those of SGX MSCI Taiwan Index futures moved up 28 per cent. The SGX Nikkei 225 Index futures increased 36 per cent from a year ago.

The SGX MSCI Singapore Index futures also achieved a record month in May, with more than one million contracts traded for the first time.

Meanwhile, the SGX USD/CNH Futures rose 38 per cent from the previous month and was up 131 per cent year on year.

On the commodities front, the ongoing trade war also kept concerns high around iron ore supply and demand.

Volumes of SGX iron ore derivatives surged 87 per cent from a year ago to 1.9 million contracts traded in May, while the freight derivatives volumes grew 54 per cent.

Overall SGX commodity derivatives volume increased by 78 per cent year on year to more than 2.2 million contracts.

Meanwhile, against the backdrop of market volatility, defensive sectors such as communication services, real estate investment trusts (Reits) and consumer staples were the top net buy sectors for institutional investors in May.

Communication services and Reits were the only sectors with positive returns, at 0.6 per cent and 0.4 per cent in total returns respectively.

Total share buyback consideration in May also hit a nine-month high, totalling S$123.1 million.

For the first five months of this year, IT was the best sector generating 18.2 per cent in total returns, followed by Reits (13.9 per cent), utilities (12.5 per cent) and consumer staples (10.3 per cent).

Fundraising activities were high during May, with four equity listings raising close to S$1.5 billion, SGX said. Eagle Hospitality Trust and ARA US Hospitality Trust were the third and fifth-largest initial public offerings in Asia ex-Japan in 2019, year to date, according to Dealogic.