Singapore Exchange (SGX)

[Rocinante2]

It makes sense for SGX to implement the FTSE Taiwan index as the first mitigation action. This is quite consistent with their prior actions in the last crisis with NSE on the Niffy contracts.

The FTSE index and MSCI index are actually quite similar in a sense that the top 10 components are the same companies (you cannot get too far off based on market cap) but weightages especially the top stock TSMC is actually very different with FTSE putting in a limit for individual stock. I reckon the difference in TSMC's weightage (MSCI:37.6% FTSE: 18.94%) would actually be the most significant difference between both contracts? I am assuming that other factors like contract sizes and expiry dates etc can be mostly equalized with SGX as the same offerer/clearing house.

I thought this change would be a very good case study and test on the supposed "network effects" that stock exchanges are expected to enjoy.

MSCI Taiwan index: https://api2.sgx.com/sites/default/files...0%29_0.pdf

SGX to introduce SGX FTSE Taiwan Index futures 

https://links.sgx.com/FileOpen/20200701_...eID=622059

This month is a watershed as the FTSE Taiwan Index futures exceed MSCI Taiwan Index futures. The transition from MSCI to FTSE for its derivative business is happening smoothly.

https://api2.sgx.com/sites/default/files...020_FA.pdf

SGX very clever. When MSCI don't continue with SGX they cut off support ASAP while HK can only ramp up in March 2021? Then trader need to find something hence move trader to FTSE. Wala... overnight MSCI contract all turn into FTSE contract and the traded volume/value stay in SGX. Brilliant move for an SOE... which we don't see too often in LionLand.

[weijian]

Well, the FTSE/MSCI Taiwan index futures are doing very decently on SGX derivatives platform and I reckon it is because of the presence of TSMC on the index.

So, there will be the first marquee company on MSCI Singapore, SEA (parent of Shopee) whom will dominate the index in a year's time. Granted, it is already very easy to hedge/bet SEA as it is listed in NYSE since 2017, and so any positive impact on SGX's MSCI Singapore index futures remains to be seen.

These are a better sign of times to come, with Grab also doing a US listing soon. If the equity business cannot capture these marquee companies, well at least, there is still a chance that the derivatives can.

Eligible foreign listings to join MSCI Singapore indices in four steps

Brian Freitas, an analyst who publishes on Smartkarma, estimates Sea's potential weight on the MSCI Singapore Index would be 1.73 per cent at the May 2021 SAIR, increasing to 8.1 per cent, 14.99 per cent and 26.07 per cent, respectively, over the subsequent reviews.

https://www.businesstimes.com.sg/compani...four-steps

[cyclone]

SGX and NZX seal partnership on dairy derivatives to unlock growth

Singapore and Wellington - Singapore Exchange (SGX) and New Zealand’s Exchange (NZX) have today signed a strategic partnership agreement to unlock and accelerate the growth potential of NZX’s dairy derivatives.

This partnership brings together the complementary capabilities of the SGX and NZX to scale up market distribution and liquidity in the global dairy derivatives markets. It will take effect in the second half of 2021, subject to regulatory approvals. This follows a Heads of Agreement that was mutually signed in October 2020 to explore the listing of NZX’s suite of dairy contracts on SGX’s trading and clearing platforms.

More details in https://links.sgx.com/1.0.0/corporate-an...growth.pdf

[¯|_(ツ)_/¯]

SGX@12.05
FY2021 Result, 8 cents dividend (total FY 32cents vs 30)
https://links.sgx.com/FileOpen/1.%20SGX%...t%20of%20S$447%20million.ashx?App=Announcement&FileID=677393


https://drive.google.com/open?id=1dZA2CZ...Q4veJWqr95

Stay home and stay safe, everyone.

[weijian]

Can SPAC be a tailwind to the lethargic equity business?

SPAC race heats up in Asia with first Singapore listings due

Vertex Technology Acquisition Corporation, sponsored by state investor Temasek’s Vertex Venture Holdings, is seeking at least S$170 million, while Tikehau Capital SCA-backed Pegasus Asia could raise at least S$150 million. The listings are slated for Jan 21 and Jan 25, respectively. 

The ability of Singapore and Hong Kong “to compete really depends on the quality of companies that we see SPACs bringing to market, and whether they are really differentiated versus what investors can get access to in the US,” said David Smith, a senior investment director for Asian equities at abrdn Asia.

https://www.businesstimes.com.sg/compani...stings-due

[weijian]

Any chances for S-Chip 2.0?

Singapore sees more US-listed Chinese companies coming to its shores

SINGAPORE Exchange (SGX) sees more listings in coming months by Chinese issuers that already trade American depository receipts, even as it grapples with delayed deals amid a global valuation slump.

Following Nio’s technical listing in May, investors can expect others will follow suit, chief executive officer Loh Boon Chye said in an interview. If market conditions are supportive for the rest of the exchange’s fiscal year through June, “there would be fundraising, but if they are not as conducive, it will be a technical secondary listing”, he added.

https://www.businesstimes.com.sg/compani...its-shores

Something about Nio:

The US Securities and Exchange Commission (SEC)’s latest list of 80 companies potentially being removed from its exchanges includes NIO, which caused the company’s shares to crash a further 15%5.

So, NIO’s proposal for a secondary listing on the main board of the Singapore Exchange as well as its listing in HK is an attempt to hedge any delisting from the US.

https://www.poems.com.sg/market-journal/...this-road/

[brattzz]

what may come, just open your eyes big big!
long list of S-Chips busts!

[weijian]

The improvement in FY23's results are largely coming from much better treasury income. This looks like a risk free carry trade. In addition, SGX's relatively large cash reserves are also allowing it to record much better interest income (+25mil or ~4% of NP). While higher interest rates are negating prospects like IPOs and securities trading volume, but on the other hand, it is benefiting tremendously in terms of treasury and interest income - It looks like a beneficiary no matter how rates change!

Responses to Shareholders’ Questions

There has been a huge increase of Treasury income from the various business units. Would the management be able to elaborate more on how the Treasury income (for each business unit) is earned?

Treasury income (TI) is earned from participants’ assets held as collateral in relation to the trading of SGX’s securities and derivatives products. Such investment is limited to permissible instruments prescribed under the Securities and Futures Act (SFA) and associated regulations.

Participants’ cash assets are placed in high-quality liquid instruments with low market risks. This include either current or fixed deposit accounts with regulated banks in Singapore and/or in reverse repurchase arrangements with qualified counterparties permitted under the SFA. The TI that SGX earns is offset by interest paid[1] to clearing members on their balances lodged. This is a standard practice of central counterparty clearing houses (CCP) globally. The higher TI in FY2023 was mainly due to rising interest rates.

[1] The interest is computed based on the daily weighted average interest rate obtained from settlement banks with which cash collateral are placed.

https://links.sgx.com/FileOpen/SGX%20Res...eID=773575

[weijian]

CG is moving in the right direction for the Spore market but my bet is that it is not the key to revive a "struggling stock market". My bet is that "risk aversion" is the underlying behavioral rootcause - manifested in "Daddy know best attitude", "A blame culture when things go wrong" and "restrictive rules" that requires last 3 years of track record/profit for listing etc.

A risk averse behavior is not wrong, of course. It gets one successfully from point A to B. But if one wants to get from point B to C, the same behavior that allowed successfully from point A to B, coincidentally doesn't work when you want to go from point B to C. I see parallels as there are also differences between becoming rich AND staying rich.

Singapore battles to revive struggling stock market

The government did not commission the document, but it has appeared as it discusses policy changes with SGX to boost the stock market. The two are responding to the next wave of South-east Asian companies – such as Singapore-based automotive marketplace Carro – opting for the US over Singapore to list.

“Singapore trumpets that it is an ‘innovation economy’ but has a retirement system that is so risk-averse. Building that liquidity might start to incentivise fund managers,” another person familiar with the talks said.

“It’s nice to have ideas and to make them part of the Singapore national agenda. But fixing poor disclosure practices, or strengthening corporate governance to give investors more assurance, remain the broader issues for us,” the hedge fund executive added.

https://www.businesstimes.com.sg/compani...ock-market

[weijian]

A stock exchange reminds me of public figures - both quite anti-fragile in a sense. Like public figures (eg. celebrities), stock exchanges are relatively agnostic towards good/bad news. Aug was a good equities trading month for the SGX, thanks to the yen-carry unwind trade.

The movement of US interest rates also add further ballast to its FX future business. Growing at 20-30% CAGR, it will probably be the biggest BU revenue contributor in the coming year (although PBIT is much lower due to lower margins).

An SGX shareholder could also look forward to the working group making some bold calculated changes to improve the equity side of things.

SGX FX Futures notional volume in August 2024 reached US$393.5 billion, up 26.88% y-o-y

Overall, as market participants prepared for a Fed pivot after digesting the FOMC meeting minutes and Jackson Hole Economic Symposium, investors rebalanced their global portfolios and hedged against currency exposure.

https://www.sgx.com/research-education/m...24-reached