Securities' daily average value up 35% to $1.41b in April

Portfolio-hedging activity eased as the Chinese economy gradually reopened.

The Singapore Exchanges' securities’ daily average value (SDAV) climbed 35% YoY to $1.41b in April, according to a report by SGX.

Overall, the total securities market turnover value rose 35% YoY to $29.6b in April. The market turnover value of exchange-traded funds (ETF) skyrocketed 140% YoY to $469m on the back of strong investment interest and capital inflow to Asia.

Global equities stabilised on early signs of market optimism, noted SGX, following the intense volatility in the first quarter. Demand to risk-manage Emerging Asia currencies sustained growth, whilst disruptions in global supply chains continued to drive trading in commodity derivatives.

Equity index futures’ traded volume on SGX fell 25% YoY in April to 12.3 million contracts. This was connected to the anticipated gradual reopening of the Chinese economy and optimism for more economic stimulus, both of which helped ease portfolio-hedging activity, noted SGX. China became the first major economy to exit its COVID-19 lockdown in April, even as it announced a contraction in its gross domestic product in the first quarter of 2020.

In contrast, the SGX Nifty 50 Index Futures’ traded volume gained 24% YoY to 1.94 million contracts during the same month, whilst the SGX Nikkei 225 Index Futures climbed 18% YoY to 1.79 million contracts.

Significantly, for the benchmark Japanese contract, volume surged 60% YoY in the T+1 overnight session, underscoring demand for continuous price formation and round-the-clock risk management from investors in the US and European time zones, according to SGX.

Meanwhile, during the month, Asia’s primary bond markets continued to moderate amidst lockdown measures in the region. Total debt fundraising on SGX reached $18.3b. Chief amongst fundraisers is Indonesia, which raised US$4.3b in a three-tranche bond issuance to fund domestic efforts to stem the spread of COVID-19.

Demand for currency risk management also continued to expand on SGX. Total FX futures’ traded volume rose 13% YoY in April to 1.71 million contracts. For USD/CNH Futures, traded volume increased 14% YoY to 679,239 contracts, whilst month-end open interest jumped 57% YoY to a notional US$6.27b.

In commodities, disruptions in the physical market drove demand for risk-management solutions even as trading volumes moderated off the highs in March. Total commodity derivatives volume on SGX slid 9% YoY in April to 1.73 million contracts.

Further, the exchange’s bellwether iron ore derivatives declined 8% YoY to 1.48 million contracts, whilst SICOM rubber futures dropped 17% YoY with 149,963 contracts.

Another notable event during the month is the West Texas Intermediate crude futures prices plunging below zero for the first time, fuelling volatility across the energy complex and downstream petrochemical markets.

As a result, petrochemicals’ volume on SGX rose 8% YoY in April to 2,492 contracts. Open interest in paraxylene and benzene derivatives, as well as coking coal futures and freight options, climbed to record highs, demonstrating increased demand for price risk management.