SGX posts jump in July futures volume as US trade war fuels demand

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

Singapore Exchange’s futures volume climbed in July as the escalating trade war fueled demand for risk management in commodities and foreign-exchange, the exchange said in a statement Thursday.

“The month was marked with periods of volatility across global markets as trade negotiations between the U.S. and China sent mixed signals. Lingering concerns of slowing economic growth and anticipations of the Federal Reserve’s next move added to the uncertainty,” SGX said.

“As the U.S.-China trade war persisted, risk-management activities in currency and commodity markets continued to rise in tandem,” the filing said.

Total foreign-exchange futures traded volume increased 23 percent on-year in July to 2.1 million contracts, rising for a third straight month, SGX said. The USD/CNH futures traded volume climbed 31 percent on-year to 803,839 contracts in the month, the statement said.

Iron ore trade surged, as the metal offers a macro proxy for emerging Asia, with 181 million metric tonnes cleared in July, up 83 percent on-year, SGX said.

Volatility in the ferrous market spurred demand for forward freight derivatives, which saw a 60 percent on-month increase to 95,000 contracts, SGX said.

“Hedging against iron ore’s slide into bear market territory this week, volatility is likely to stay elevated amid a tug of war – on the one hand with supply disruptions and on the other with demand concerns amid the trade war,” SGX said.

Equity index futures volumes increased 4 percent on-year to 13.5 million contracts, a fifth straight month of on-year increases, SGX said. It added that MSCI Singapore index futures rose 31 percent on-year to a record 1.0 million contracts.

The total securities market turnover value rose 11 percent on-month to S$24.3 billion, while securities daily average value slipped 8 percent to S$1.1 billion, SGX said.

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