Singapore Exchange: US-China trade war spurred surge in May derivatives trading

SGX ticker at Shenton Way building in Singapore; taken October 2018.SGX ticker at Shenton Way building in Singapore; taken October 2018.

The U.S.-China trade war spurred a surge in demand for derivatives trading in May, with total derivatives traded volume jumping 46 percent on-year to 24.2 million contracts, Singapore Exchange said Monday.

In addition, the trade war caused broad-based declines across most Asian equity indexes in May, and SGX’s securities daily average value fell 18 percent on-year in the month, but was up 5 percent from April, at S$1.1 billion, the exchange said.

“Growing fears around the U.S.-China trade war have roiled markets globally and reduced investor tolerance for uncertainty,” SGX said in a statement. “Investors with exposure to various Asian asset classes, particularly currency and equity, turned to SGX to manage price and risk exposures given its waterfront access to the region.”

Traded volumes of SGX FTSE China A50 Index futures climbed 82 percent on-year in May, SGX MSCI Taiwan Index futures volumes rose 28 percent on-year and SGX Nikkei 225 Index futures volumes increased 36 percent on-year, SGX said, noting institutional investors were seeking to manage their Asia equity portfolios.

For SGX USD/CNH futures, traded volumes increased 38 percent on-month and 131 percent on-year in May, SGX said.

The trade war has also spurred concerns about iron ore supply and demand, which in turn sent volumes of SGX iron ore derivatives up 87 percent on-year in May to 1.9 million contracts, SGX said.

Freight derivatives volume were up 54 percent on-year and overall SGX commodity derivatives volume jumped 78 percent on-year to more than 2.2 million contracts in the month, SGX said.

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