Forex futures contracts traded on the Singapore Exchange (SGX), Asia's leading securities and derivatives marketplace, increased 36% year-over-year (YoY) to 9.3 million contracts during the first quarter (Q1) of 2023. Additionally, the contracts grew 25% month-over-month (MoM) to 3.7 million contracts amidst strong institutional demand to manage Asian currency risk.
Renminbi FX Futures Peaks in March
SGX Group disclosed these trends on Monday in its latest market statistics for March 2023. According to the exchange operator, the SGX USD/CNH futures, which are the world’s most widely-traded international renminbi futures, jumped to a record high of 2.2 million contracts in March. This represents a 44% MoM growth rate.
In addition, the average daily volume (ADV) of the renminbi futures peaked at a record US$9.5 billion in March, which is up 79% YoY. This record performance came on the heel of the improvement in the domestic economic outlook of China. As a result, yuan-denominated trade settlement and investment gained traction last month, SGX Group said.
In addition, SGX’s latest data shows that the SGX KRW/USD futures surged 60% YoY to a record 8,577 lots as market volatility drove more hedging.
Confidence in China’s Return Boosts Markets
In addition to forex futures, index futures boasted of better performance last month. The volume of equity index futures traded in March shot up 14% MoM to 14.9 million contracts. This growth was led by SGX Nifty 50 Index Futures which grew 17% MoM to 2.7 million contracts. This derivatives index on SGX is based on the Indian Nifty 50 which tracks the performance of the 50 largest companies listed on India's National Stock Exchange.
Furthermore, the SGX FTSE China A50 Index Futures increased slightly by 3% MoM to 7.7 million contracts in March. This reinforced the position of the China A5O Index-based derivative instrument “as the world’s most liquid international futures for Chinese equities ,” SGX noted.
“Across other SGX Equity Derivatives benchmarks, there were broad-based gains in March. SGX Nikkei 225 Index Futures volume was up 84% m-o-m, SGX FTSE Taiwan Index Futures volume climbed 26% m-o-m, while SGX MSCI Singapore Index Futures volume increased 14% m-o-m,” the exchange operator explained.
On the other hand, SGX's latest report notes that confidence in the reopening of the Chinese economy would spur growth in Asia leading to record activity on SGX Commodities. In March, participation in commodities derivatives shot up to an all-time high as trading volume gained 20% MoM to 4.2 million contracts. In addition, volume in this derivatives market rose 22% YoY to 10.6 million contracts during Q1 2023.
“During the month, SGX Commodities launched container derivatives, expanding on its leadership as the world’s largest clearing venue for dry forward freight agreement (FFA) futures,” SGX added.
Singapore Beats Other ASEAN Markets in Securities
Furthermore, SGX Securities was not left out of the monthly and first-quarter growth trends. Securities market turnover gained 27% MoM to S$28 billion, which is the highest since May 2022. The ADV in this market also rose 10% MoM to S$1.22 billion, which is the highest since November 2022.
The growth trend in Singapore’s securities market, which is the highest in the Association of Southeast Asian Nations (ASEAN) markets, “was driven by the inclusion of Sembcorp Marine to the MSCI Singapore Index, increased trading activity in the banking sector, as well as growth in small and mid-cap stocks.”
