Monthly Performance Largely In Line, Dragged By Equity Derivatives
For Aug 22, SDAV softened as trading volatility eases while DDAV grew, driven by the forex and commodities segment. SGX’s equity index futures moderated in Aug 22, dragged by lower FTSE China A50 Index volumes, while the forex and commodities derivatives continued their outperformance. From a lack of near-term catalysts, we downgrade SGX to HOLD with a lower target price of S$10.04 (S$10.85 previously).
• Securities turnover value fell. In line with expectations, Securities Daily Average Value (SDAV) continued its downward momentum (-11.6% yoy, +22.6% mom). However, on an mom basis, SDAV was driven by a resilient corporate earnings season along with a strong month-end rebalancing by institutions, leading an estimated S$750m in net inflows for Aug 22. Barring any unforeseen spike in trading volatility, we expect SDAV to continue its downtrend.
• Equity derivatives softened. Derivatives Daily Average Volume (DDAV) rose slightly (+2.0% yoy, -6.6% mom), driven by uncertainty over China’s economic outlook and the Fed’s unprecedented interest rate hikes. However, below expectations, total equity index futures volumes fell (-4.2% yoy, -0.1% mom), dragged by lower FTSE China A50 Index volumes (- 10.2% yoy, +2.2% mom) whereas other major equity index futures such as FTSE Nifty 50 Index futures (+14.4% yoy, -2.2% mom), FTSE Nikkei 225 Index futures (+17.3% yoy, -4.7% mom) and MSCI Singapore Index futures grew (+7.8% yoy, +6.9% mom), supporting volumes.
• Forex and commodities surged. In line with expectations, total forex futures volumes surged 30.8% yoy as USD/CNH futures (+44.7% yoy, +3.6% mom) and INR/USD futures (+17.2% yoy, +3.4% mom) grew from elevated institutional hedging demand. Total commodity derivatives volumes also increased 29.0% yoy with increased adoption. Iron ore futures (+34.6% yoy, -10.5% mom) climbed while Singapore Exchange (SGX) SICOM rubber futures increased 22.0% yoy to 167,000 contracts.