SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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<ul>
<li>
In its January report, the World Gold Council said it expects increased market uncertainty, expansion of protectionist policies, and the Fed's more neutral monetary policy stance to make gold increasingly attractive to investors as an effective portfolio diversifier and hedge against systemic risk. 
	 </li>
	<li>
In late February, spot gold surged past the US$1,346/oz level to a 10M high, buoyed by uncertainty over the outlook for global economic growth and trade. Bullion prices have since pulled back, ending the March quarter at US$1,292.38/oz, up 0.8% since the start of the year. 
	 </li>
	<li>SGX offers investors opportunities to participate in the gold sector through three mining stocks – CNMC Goldmine, Wilton Resources and Anchor Resources – and the SPDR Gold Shares ETF. For 1Q 2019, the ETF generated a 4.6% and 4.8% YoY increase in volume and turnover respectively. Volume and turnover for the ETF also nearly doubled in March from the previous month.</li>
</ul>
SGX offers investors opportunities to participate in the gold sector through three mining stocks – CNMC Goldmine, Wilton Resources and Anchor Resources – and the SPDR Gold Shares ETF.

Bullion’s Diversification Role

The <a href="https://www.gold.org/">World Gold Council</a> (WGC) has consistently flagged the diversification role of gold, noting that bullion is a classic haven asset. It has suggested that when investors add risky assets to their portfolios, gold should make up 2%-10% of the portfolio, and more specifically, for portfolios that comprise 60% equities and 40% debt, a 5%-6% allocation to gold is recommended. This is because the metal has a history of maintaining low correlations to most other asset classes, and including assets with a low correlation to each other helps reduce overall portfolio risk.

Gold’s Bright Outlook

In a <a href="https://www.gold.org/goldhub/research/outlook-2019">report</a> published in January 2019, the World Gold Council said it expects increased market uncertainty and the expansion of protectionist economic policies to make gold increasingly attractive as a hedge. While gold may face headwinds from higher interest rates and US dollar strength, these effects are expected to be limited after the US Federal Reserve signalled a more neutral monetary policy stance. Structural economic reforms in key gold markets will also continue to support demand for gold in jewellery, technology and as means of savings, it added.

“We believe that in 2019, global investors will continue to favour gold as an effective diversifier and hedge against systemic risk,” it noted, adding that levels of risk and uncertainty are increasing. It cited expensive equity valuations, higher global market volatility, political and economic instability in Europe, and the increased likelihood of a global recession as factors.

Spot Gold Prices

In late February, spot gold surged past the US$1,346/oz level to a 10-month high, buoyed by uncertainty over the outlook for global economic growth and trade, equity market volatility, as well as signs of a slower rate hike cycle by the Fed. Lower rates boost the appeal of bullion as it is a non-interest-bearing asset.

In recent weeks, investor appetite for riskier assets have returned, causing gold to retreat below the US$1,300/oz mark. It closed at US$1,292.38/oz on 29 March 2019, gaining 0.8% since the start of the year.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-04/Gold%20Prices.PNG" alt="Gold">
 </figure>
 <div class="content-caption">Gold</div>
SGX’s Gold Mining Trio

SGX’s three gold mining plays – CNMC Goldmine, Wilton Resources and Anchor Resources – are in different stages of the gold exploration, development and production cycle. The trio, with a combined market capitalisation of about S$180 million, have averaged a total return of -12.7% in the first three months of 2019. This is an improvement over average total returns of -31.9% over the last 12 months.

While gold stocks have a high correlation to physical gold, they are typically considered leveraged plays on the metal. In addition to bullion prices, there are also many other factors – such as corporate activity, currency, gold discovery, earnings power, operating efficiencies – that impact the price of gold stocks. Mining companies may also often take up to 10 years or longer to develop their mining projects and bring them to production. While there are no upstream gold mining activities in Singapore, the city-state is home to downstream international gold refineries and bullion product manufacturing plants, with significant storage capacity through Singapore Freeport.

The table below details the three gold mining plays, sorted by market capitalisation.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			P/E (x)
			</td>
			<td>
			P/B (x)
			</td>
			<td>
			Div Yld (%)
			</td>
		</tr>
<tr>
<td>
			CNMC GOLDMINE
			</td>
			<td>
			5TP
			</td>
			<td>
			90
			</td>
			<td>
			2.3
			</td>
			<td>
			-13.1
			</td>
			<td>
			11.1
			</td>
			<td>
			40.0
			</td>
			<td>
			1.6
			</td>
			<td>
			0.9
			</td>
		</tr>
<tr>
<td>
			WILTON RESOURCES
			</td>
			<td>
			5F7
			</td>
			<td>
			73
			</td>
			<td>
			-14.3
			</td>
			<td>
			-45.5
			</td>
			<td>
			-55.9
			</td>
			<td>
			NA
			</td>
			<td>
			3.9
			</td>
			<td>
			NA
			</td>
		</tr>
<tr>
<td>
			ANCHOR RESOURCES
			</td>
			<td>
			43E
			</td>
			<td>
			19
			</td>
			<td>
			-26.1
			</td>
			<td>
			-37.0
			</td>
			<td>
			-86.8
			</td>
			<td>
			NA
			</td>
			<td>
			4.7
			</td>
			<td>
			NA
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 29 March 2019)

SPDR® Gold Shares ETF  

SPDR® Gold Shares ETF offers an innovative, relatively cost-efficient and secure way to access the gold market. The exchange traded fund (ETF) aims to lower many barriers that prevent some investors from investing in bullion, including the logistics of buying, storing and insuring the commodity. In addition, certain pension funds and mutual funds do not or cannot hold physical commodities or the derivatives. The ETF is set up to reflect the performance of bullion, less the fund’s expenses. It tracks the London Bullion Market Association PM Gold Price, and the physical bullion is kept in the form of London Good Delivery bars.

For the first three months of 2019, SPDR® Gold Shares ETF saw a year-on-year rise in investor participation – it generated an increase of 4.6% and 4.8% in volume traded and turnover respectively from the year-ago quarter. In March, volume and turnover for the ETF also nearly doubled from the previous month.

The tables below detail the volume and trading turnover for SPDR® Gold Shares ETF for the months of January to March 2019 and 1Q 2019.

<table class="table table-striped"><tbody>
<tr>
<td>
			 
			</td>
			<td>
			Jan-19
			</td>
			<td>
			Feb-19
			</td>
			<td>
			Mar-19
			</td>
		</tr>
<tr>
<td>
			Volume Traded (S$)
			</td>
			<td>
			354,530
			</td>
			<td>
			118,000
			</td>
			<td>
			234,505
			</td>
		</tr>
<tr>
<td>
			Turnover (S$)
			</td>
			<td>
			59,049,710
			</td>
			<td>
			19,991,401
			</td>
			<td>
			38,897,556
			</td>
		</tr>
<tr>
<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			 
			</td>
			<td>
			1Q 2018
			</td>
			<td>
			1Q 2019
			</td>
			<td>
			YoY Chg (%) 
			</td>
		</tr>
<tr>
<td>
			Volume Traded (S$)
			</td>
			<td>
			675,790
			</td>
			<td>
			707,035
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			Turnover (S$)
			</td>
			<td>
			112,579,605
			</td>
			<td>
			117,938,667
			</td>
			<td>
			4.8
			</td>
		</tr>
</tbody></table>
Source: SGX data

SPDR® Gold Shares is designated as a non-Specified Investment Product, and is thus an Excluded Investment Product (EIP), accessible to anyone without pre-qualification. Investors should refer to the <a href="http://www.spdrgoldshares.com/media/GLD/file/singapore/GLD-Sing-Prospectus-2017-06-07.pdf">fund prospectus</a> for more information, including product risks.

ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.
</body></html>





In its January report, the World Gold Council said it expects increased market uncertainty, expansion of protectionist policies, and the Fed's more neutral monetary policy stance to make gold increasingly attractive to investors as an effective portfolio diversifier and hedge against systemic risk. 
	 
	
In late February, spot gold surged past the US$1,346/oz level to a 10M high, buoyed by uncertainty over the outlook for global economic growth and trade. Bullion prices have since pulled back, ending the March quarter at US$1,292.38/oz, up 0.8% since the start of the year. 
	 
	SGX offers investors opportunities to participate in the gold sector through three mining stocks – CNMC Goldmine, Wilton Resources and Anchor Resources – and the SPDR Gold Shares ETF. For 1Q 2019, the ETF generated a 4.6% and 4.8% YoY increase in volume and turnover respectively. Volume and turnover for the ETF also nearly doubled in March from the previous month.

SGX offers investors opportunities to participate in the gold sector through three mining stocks – CNMC Goldmine, Wilton Resources and Anchor Resources – and the SPDR Gold Shares ETF.

Bullion’s Diversification Role

The World Gold Council (WGC) has consistently flagged the diversification role of gold, noting that bullion is a classic haven asset. It has suggested that when investors add risky assets to their portfolios, gold should make up 2%-10% of the portfolio, and more specifically, for portfolios that comprise 60% equities and 40% debt, a 5%-6% allocation to gold is recommended. This is because the metal has a history of maintaining low correlations to most other asset classes, and including assets with a low correlation to each other helps reduce overall portfolio risk.

Gold’s Bright Outlook

In a report published in January 2019, the World Gold Council said it expects increased market uncertainty and the expansion of protectionist economic policies to make gold increasingly attractive as a hedge. While gold may face headwinds from higher interest rates and US dollar strength, these effects are expected to be limited after the US Federal Reserve signalled a more neutral monetary policy stance. Structural economic reforms in key gold markets will also continue to support demand for gold in jewellery, technology and as means of savings, it added.

“We believe that in 2019, global investors will continue to favour gold as an effective diversifier and hedge against systemic risk,” it noted, adding that levels of risk and uncertainty are increasing. It cited expensive equity valuations, higher global market volatility, political and economic instability in Europe, and the increased likelihood of a global recession as factors.

Spot Gold Prices

In late February, spot gold surged past the US$1,346/oz level to a 10-month high, buoyed by uncertainty over the outlook for global economic growth and trade, equity market volatility, as well as signs of a slower rate hike cycle by the Fed. Lower rates boost the appeal of bullion as it is a non-interest-bearing asset.

In recent weeks, investor appetite for riskier assets have returned, causing gold to retreat below the US$1,300/oz mark. It closed at US$1,292.38/oz on 29 March 2019, gaining 0.8% since the start of the year.

      
    
    Gold
SGX’s Gold Mining Trio

SGX’s three gold mining plays – CNMC Goldmine, Wilton Resources and Anchor Resources – are in different stages of the gold exploration, development and production cycle. The trio, with a combined market capitalisation of about S$180 million, have averaged a total return of -12.7% in the first three months of 2019. This is an improvement over average total returns of -31.9% over the last 12 months.

While gold stocks have a high correlation to physical gold, they are typically considered leveraged plays on the metal. In addition to bullion prices, there are also many other factors – such as corporate activity, currency, gold discovery, earnings power, operating efficiencies – that impact the price of gold stocks. Mining companies may also often take up to 10 years or longer to develop their mining projects and bring them to production. While there are no upstream gold mining activities in Singapore, the city-state is home to downstream international gold refineries and bullion product manufacturing plants, with significant storage capacity through Singapore Freeport.

The table below details the three gold mining plays, sorted by market capitalisation.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			P/E (x)
			
			
			P/B (x)
			
			
			Div Yld (%)
			
		


			CNMC GOLDMINE
			
			
			5TP
			
			
			90
			
			
			2.3
			
			
			-13.1
			
			
			11.1
			
			
			40.0
			
			
			1.6
			
			
			0.9
			
		


			WILTON RESOURCES
			
			
			5F7
			
			
			73
			
			
			-14.3
			
			
			-45.5
			
			
			-55.9
			
			
			NA
			
			
			3.9
			
			
			NA
			
		


			ANCHOR RESOURCES
			
			
			43E
			
			
			19
			
			
			-26.1
			
			
			-37.0
			
			
			-86.8
			
			
			NA
			
			
			4.7
			
			
			NA
			
		

Source: Bloomberg &amp; StockFacts (data as of 29 March 2019)

SPDR® Gold Shares ETF  

SPDR® Gold Shares ETF offers an innovative, relatively cost-efficient and secure way to access the gold market. The exchange traded fund (ETF) aims to lower many barriers that prevent some investors from investing in bullion, including the logistics of buying, storing and insuring the commodity. In addition, certain pension funds and mutual funds do not or cannot hold physical commodities or the derivatives. The ETF is set up to reflect the performance of bullion, less the fund’s expenses. It tracks the London Bullion Market Association PM Gold Price, and the physical bullion is kept in the form of London Good Delivery bars.

For the first three months of 2019, SPDR® Gold Shares ETF saw a year-on-year rise in investor participation – it generated an increase of 4.6% and 4.8% in volume traded and turnover respectively from the year-ago quarter. In March, volume and turnover for the ETF also nearly doubled from the previous month.

The tables below detail the volume and trading turnover for SPDR® Gold Shares ETF for the months of January to March 2019 and 1Q 2019.




			 
			
			
			Jan-19
			
			
			Feb-19
			
			
			Mar-19
			
		


			Volume Traded (S$)
			
			
			354,530
			
			
			118,000
			
			
			234,505
			
		


			Turnover (S$)
			
			
			59,049,710
			
			
			19,991,401
			
			
			38,897,556
			
		


			 
			
			
			 
			
			
			 
			
			
			 
			
		


			 
			
			
			1Q 2018
			
			
			1Q 2019
			
			
			YoY Chg (%) 
			
		


			Volume Traded (S$)
			
			
			675,790
			
			
			707,035
			
			
			4.6
			
		


			Turnover (S$)
			
			
			112,579,605
			
			
			117,938,667
			
			
			4.8
			
		

Source: SGX data

SPDR® Gold Shares is designated as a non-Specified Investment Product, and is thus an Excluded Investment Product (EIP), accessible to anyone without pre-qualification. Investors should refer to the fund prospectus for more information, including product risks.

ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.



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Singapore

CNMC Goldmine Holdings Ltd. explores for gold and processes mined ore into gold dore.  The Company operates in Kelantan State of Malaysia.

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CNMC Goldmine Holdings (CNMC SP)

Gold Grabs Spotlight on Recent Economic Outlook

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Highlights of Gold Opportunities on SGX

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Singapore Exchange Ltd (SGX)

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