SGX September commodity derivatives trade rises amid trade war concerns

Stock ticker at SGX building on Shenton Way; taken October 2018.Stock ticker at SGX building.

Singapore Exchange reported Friday its September commodities derivatives volume climbed as price volatility in physical commodity markets spurred demand for risk-management tools.

Iron ore derivatives volume jumped 98 percent on-year in September to 1.57 million contracts on increased hedging by physical and financial market players ahead of China’s week-long holiday starting 1 October, SGX said in a statement.

For the July-to-September period, the benchmark iron-ore derivatives volume climbed 98 percent on-year to 5.85 million contracts, SGX said.

SGX petrochemicals futures volume increased 53 percent on-year in the month, SGX said.

“The broader oil complex gained following a geopolitical flashpoint in Saudi Arabia that prompted the biggest single-day rally in crude prices in about 30 years. During the month, both monthly and quarterly electricity futures contracts also set new record volumes on the exchange,” SGX said in the statement.

In the foreign exchange segment, SGX USD/CNH futures volume climbed 74 percent on-year to 818,619 contracts for the month amid signs of potential progress in U.S.-China trade talks after some tariffs were deferred, SGX said.

In addition, SGX INR/USD futures volume rose 23 percent on-year to 1.41 million contracts in September on institutional demand to manage exposure to the Indian rupee, the exchange said.

For the July-to-September quarter, total foreign-exchange trading volume rose to US$383 billion, a record high, SGX said.

However, equity derivatives volume declined, with total equity index futures volume down 5 percent on-year at 14.2 million contracts in September on lower FTSE China A50 futures volume, the exchange said. On the upside, volume of MSCI Taiwan, MSCI Singapore, Nikkei 225 and Nifty 50 contracts increased, SGX said.

“Further interest rate cuts by the U.S. Federal Reserve, alongside persistent uncertainties over Britain’s exit from the European Union ahead of an agreed 31 October deadline, fanned concerns over global growth, with slower equity market activity in September,” SGX said.

“Trading volumes across SGX’s suite of equity derivatives reflected mixed investor sentiment on the back of ongoing U.S.-China trade developments,” it added.

The total securities market turnover rose 2 percent on-year in September to S$19.7 billion, while the securities daily average value (SDAV) fell 3 percent on-year to S$940 million, SGX said.

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