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SGX May derivatives volume spike over US-China trade war concerns

Michelle Zhu

SINGAPORE (June 10): The Singapore Exchange (SGX) reported a 46% y-o-y growth in total derivatives traded volume in May 2019.

In a press release on Monday, the bourse attributes the significant growth in volumes across derivatives products to increased demand for risk management as a result of the ongoing US-China trade war.  

While most Asian equity indices saw broad-based declines for the month of May, the total securities market turnover value in Singapore was up 5% m-o-m to $23.1 million.

SGX says this comes as investors with exposure to various Asian asset classes, particularly currency and equity, turned to Singapore to manage price and risk exposure given SGX’s waterfront access to the region – as growing fears around the US-China trade war have roiled markets globally and reduced investor tolerance for uncertainty.

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.

Notably, 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% and 131% m-o-m and y-o-y, respectively, following an already-significant growth last month.

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.

Against the backdrop of market volatility, defensive sectors like Communication Services and REITs were the top net buy sectors for institutional investors in May. These sectors also were the only two with positive returns at +0.6% and +0.4% total returns, respectively.

For 5M19, IT was the best-performing sector generating 18.2% in total returns. This was follows by REITs, Utilities and Consumer Staples with total returns of +13.9%, 12.5% and +10.3%, respectively.

SGX says total share buyback consideration in May also hit a nine-month high, totalling $123.1 million.

While securities daily average value (SDAV) fell 18% y-o-y in May, it 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.