SGX’s FX volumes rise 20% as China weakness fuels volatility
The Singapore Exchange (SGX), the country’s paramount exchange operator, has released its monthly volumes across its FX, derivatives and commodities segments for September 2023.
The recent report reflects a notable increase in derivative trading activity, driven largely by central bank meetings and subsequent global equity market sell-offs. With surging oil prices and expanding rate differentials, institutional investors across the globe leaned heavily on the SGX Group’s diverse offerings to hedge their portfolios.
The Derivatives daily average volume (DAV) for September rose 3% to 1.1 million contracts both year-on-year and month-on-month. Meanwhile, the July-to-September quarter shows a 4% uptick in the total derivatives traded volume, touching 65.6 million contracts.
On the foreign exchange front, SGX FX observed a 20% year-on-year boost in its total FX futures traded volume for September, as prolonged U.S. interest rate concerns kindled market activity.
The unprecedented cycle of interest-rate hikes by global central banks continued to place Asian currencies under pressure, driving institutional hedging on SGX FX. The speculation had fueled volatility on key Asian currencies including the renminbi (RMB) and Indian rupee, driving risk-management demand.
Commodities trading was especially dynamic during September. A record-high commodity derivatives traded volume was reported, registering a year-on-year growth of 77% to 5.4 million contracts. This performance was echoed across several commodity products, with iron ore, freight derivatives, petrochemicals, and rubber futures standing out. The latter, the SGX SICOM rubber futures, often regarded as the global benchmark for natural rubber pricing, reached another record high with a year-on-year growth of 37%.
SGX Commodities has recently introduced a suite of energy metals derivatives to provide market participants with better price discovery on a single liquid and capital-efficient platform.
In the securities segment, however, the picture was less rosy. With major global stock markets facing headwinds, Singapore’s securities daily average value (SDAV) receded 19% month-on-month in September to S$867 million. The benchmark Straits Times Index (STI) edged down slightly by 0.5% month-on-month, settling at 3,217.41 points.
Nonetheless, September saw the listing of the iShares MSCI Asia ex-Japan Climate Action ETF on the SGX Securities. Boasting a launch asset under management value of US$426 million, this ETF is now the largest equity exchange-traded fund in Singapore.
Closing the month, the SGX Fixed Income segment registered a 28% month-on-month increase in amounts issued from 39 new bond listings, culminating at S$22.2 billion.
