The benchmark STI generated a 5% gain over the January-to-March quarter, topping stock benchmarks across Asean, says bourse

 

[SINGAPORE] The total securities market turnover value on the Singapore Exchange (SGX) : S68 +1.95% increased 25 per cent year on year to S$29.7 billion in March, with the Straits Times Index (STI) and volumes across multiple asset classes hitting record levels.

 

March&rsquo s total market turnover volume fell 23 per cent to 26.8 billion shares, from 34.7 billion shares in the same month a year ago, said the bourse in its monthly market statistics report on Tuesday (Apr 8).

 

The securities daily average value reached a three-year high in March, rising 25 per cent on year to about S$1.5 billion. Derivatives traded volume increased 14 per cent to 27.4 million contracts, with derivatives daily average volume climbing 12 per cent to 1.3 million contracts.

 

The STI rose above 4,000 for the first time on Mar 28. It generated a 5 per cent gain over the January-to-March quarter, topping stock benchmarks across Asean.

 

Meanwhile, SGX noted that small and mid-cap stocks continued to garner investor interest with another consecutive month of net institutional inflows in March.

 

The month also saw higher trading of securities products, with SGX Securities broadening its offering of Singapore Depository Receipts (SDRs) by launching three Hong Kong underlying assets &ndash Xiaomi, Meituan and Ping An &ndash on Mar 5.

 

SGX Group also listed the Lion-China Merchants CSI Dividend Index exchange-traded fund (ETF) on Mar 28. This marked the ninth ETF under the ETF product links between Singapore and China and brought combined assets under management to more than S$700 million.

 

For the January-to-March quarter, the combined turnover value of SDRs, daily leverage certificates, structured warrants and ETFs was up 13.6 per cent from the previous three-month period at S$3.6 billion.

 

On a month-on-month basis, the daily average volume of the SGX MSCI Singapore Index Futures rose 13 per cent in March to a notional US$1.8 billion, while month-end open interest climbed to a notional US$6.4 billion.

 

SGX noted that these were record highs, with the increases demonstrating &ldquo growing investor confidence in Singapore&rsquo s equity market, even during times of volatility&rdquo .

 

India equity derivatives had their best performance in March. The volume of Gift Nifty 50 Index Futures increased 10 per cent year on year to two million contracts, with daily average volume up 11 per cent at 107,320 lots, amounting to a notional US$5 billion.

 

For the January-to-March quarter, volume climbed to a record 5.9 million contracts, driven by a resurgence in Indian equities, said SGX. Open interest rose 7 per cent over the previous three-month period to 213,491 lots, which amounted to a notional US$10 billion, &ldquo underscoring sustained growth for a key offering from SGX Equity Derivatives&rdquo .

 

In forex, the volume of SGX INR/USD FX Futures jumped 80 per cent year on year to 2.4 million contracts. This lifted total futures volume on SGX FX by 53 per cent to 6.6 million contracts.

 

For the January-to-March quarter, the volume of SGX INR/USD FX Futures rose 31 per cent from the previous three-month period to 6.8 million contracts, while the volume of total FX futures increased 8 per cent to a record 18.5 million contracts.

 

For commodities, the volume of dairy derivatives reached a single-day record of 31,000 lots on Mar 19, with daily average volume up 82 per cent on year at a new high of 4,484 lots.

 

&ldquo The gains were driven by record options volume of 41,429 lots, as market participants increasingly leveraged advanced strategies to manage risk and capture opportunities,&rdquo said SGX.

 

Petrochemicals traded volume climbed 47 per cent year on year in March to the equivalent of 2.7 million tonnes &ldquo as volatility in physical prices drove hedging&rdquo , SGX added. The average open interest for March reached a new high of 2.8 million tonnes and hit a record of eight million tonnes for the January-to-March quarter.

 

Among the petrochemicals suite, benzene contracts achieved a record monthly volume of 1.1 million tonnes in March.

The initiatives aim to spur trading liquidity and encourage more research into Singapore-listed companies

 

Shares of the Singapore Exchange (SGX) jumped more than 5 per cent on Monday (Feb 24) morning following the announcement of initiatives to revive the stock market by a review group led by the Monetary Authority of Singapore (MAS).

 

They include a S$5 billion initiative, called the Equity Market Development Programme, which will channel the funds to asset managers with a &ldquo strong investment track record&rdquo and a focus on Singapore-listed equities, MAS said on Friday.

 

Beyond strengthening the fund management ecosystem, the S$5 billion injection also seeks to boost trading liquidity and encourage more research into Singapore-listed companies, said Enterprise Singapore executive chairman Lee Chuan Teck.

 

SGX shares last pared some gains to trade up 3.91 per cent at S$13.3 by the market close on Monday.

 

Another key measure unveiled on Friday is a revision to the Global Investor Programme (GIP), which grants permanent residency to eligible foreign investors.

 

The Economic Development Board, which administers the GIP, will adjust the requirements for family offices, requiring them to invest a more targeted proportion of their assets directly in Singapore-listed equities. Under the revised rules, single-family offices must allocate at least S$50 million of their assets under management to equities listed on Singapore-approved exchanges.

 

Overall, prospectus requirements and listing processes will be streamlined, particularly in areas such as financial disclosures, interested-person transactions and conflicts of interest.

 

Friday&rsquo s announcements mark an update on the measures from the MAS review group, following its Feb 13 tax incentive proposals.

 

Formed last August, the review group comprises private-sector stakeholders and public-sector representatives. Its aim is to enhance the competitiveness of Singapore&rsquo s equities market by attracting investor interest, increasing the supply of quality listings and streamlining the regulatory process for initial public offerings.

 

&ldquo Particularly impactful&rdquo

Morgan Stanley highlighted two measures that it said were &ldquo particularly impactful&rdquo : the S$5 billion liquidity injection and the revised rules for family offices.

 

&ldquo These are bold and meaningful steps being taken by the authorities, in our view, and likely serve as re-rating catalysts that underpin our positive outlook for Singapore... it is substantial and impactful,&rdquo said the bank.

 

&ldquo The S$5 billion initial investment likely crowds in more private capital which, together with family offices (growing in number at an average of 400 new single-family offices per annum since 2020), could be the start of a ripple effect driving billions of dollars of incremental flows each year,&rdquo it added.

 

Morgan Stanley noted that MAS aims to unveil a second set of measures by the end of the year, saying the measures demonstrate there is &ldquo sufficient political will&rdquo to ensure that efforts to entrench Singapore&rsquo s position as a global financial hub are successful.

 

&ldquo A better-functioning equity market is key to kick-starting a virtuous circle of better trading liquidity and fairer valuation multiples, enabling more job creation and capital formation for the economy along the way,&rdquo it said.

 

Singapore&rsquo s benchmark Straits Times Index (STI) jumped to highs twice in the past month, alongside records also set by the shares of DBS, UOB and OCBC.

 

In the Budget statement last week, measures announced included a corporate income tax rebate for Singapore-based firms seeking a listing enhanced concessionary tax rates for new fund managers which want to list locally and scale up their activities via public fundraising and tax exemptions for fund managers which invest substantially in Singapore-listed equities.

 

Morgan Stanley reiterated its constructive view on Singapore stocks.

 

Last week, JPMorgan upgraded its call on Singapore equities to &ldquo overweight&rdquo . It said: &ldquo We upgrade Singapore equities to overweight in (the) Asean and Asia ex-Japan region on government support to the stock market, high dividend yields and government&rsquo s fiscal room to cushion the impact of an external slowdown.&rdquo

 

JPMorgan&rsquo s &ldquo bull-case target&rdquo for the STI is 4,200, while Macquarie&rsquo s year-end target for the index is 4,000, it said last week. The STI closed at 3,927.75 on Monday.

 

Beyond government efforts to boost the local equities landscape, inexpensive valuation, lower volatility compared to its regional peers and decent earnings expansion were other reasons cited by JPMorgan analysts for their upgrading of Singapore equities.

 

However, Macquarie said: &ldquo Our interaction with investors suggests they need to see material demand-side measures driving more funds, to get more positive on SGX.&rdquo

 

Specifically, this refers to involving sovereign wealth fund GIC or the Central Provident Fund Board in supporting the local equities market. &ldquo However, recent disclosures from the government appear to rule these out,&rdquo Macquarie analysts added.