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.

Equity Bottom-Up

Great Wall Pan Asia Holdings L / Equity Bottom-Up

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As NetEase &amp; JD.com look to complete their secondary listings in Hong Kong, investors can now gain exposure to China’s second-largest gaming giant and China’s No. 2 online retailer respectively with SGX-listed Warrants and DLCs. 
	 </li>
	<li>
Issued by Societe Generale, the 5x Long DLCs on NetEase and JD.com will start trading on Thursday 18 June. Each underlying stock will have two Long DLCs with an issue price of S$0.50 and S$2.50 to offer investors more choice on price and sensitivity. 
	 </li>
	<li>Issued by Macquarie Bank, call warrants on NetEase started trading on 12 June while call warrants on JD.com will start trading on 18 June. Call warrants on NetEase have an exercise price of HKD150 and 180; Call warrants on JD.com have an exercise price of HKD288 and 320.</li>
</ul>
 
 Daily Leverage Certificates (“DLCs”) and Structured warrants (“Warrants”) are financial instruments issued by a third-party financial institution, usually investment banks, and are traded in the SGX securities market. DLCs and Warrants offer investors an alternative instrument to participate in the price performance of an underlying asset at a fraction of the underlying asset price. Any failure of the issuer or guarantor to perform obligations when due (e.g. issuer becomes insolvent), may result in the loss of an entire investment. NetEase and JD.com posted strong YTD total returns 
NetEase and JD.com ADRs listed on Nasdaq has had a strong performance in 2020 thus far, posting year-to-date (YTD)  total returns of +36% and +69% respectively despite the dip in March, as the global economy took steps toward reopening and recovering from the COVID-19 pandemic.  
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-06/130fda9d-cbdb-415a-a88a-be9d9be049bf.PNG' alt='Total return YTD' />
 </figure>
 <div class='content-caption'>Total return YTD</div>
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The top quartile of global stocks focused on software and e-commerce by market value have generated a median total return of 10% in the 2020 year through to 15 June. While these stocks generally trade at high P/E valuations, they also trade with above average volatility, with median volatility of 52% over the past 12 months. 
The two heavyweights, Microsoft Corporation and Amazon.com Inc, currently maintain a total of S$3.75 trillion in combined market cap, however the top quartile of global stocks focused on software and e-commerce by market value now include marginally more stocks domiciled in China than the US.   Secondary Listing of NetEase and JD.com oversubscribed multiple times 
Two decades after its depository receipts were listed on Nasdaq in 2000, NetEase, China’s second-largest gaming giant, has debuted in a secondary listing on the Hong Kong stock exchange on 11 June 2020. Garnering strong market interest, NetEase’s offering was oversubscribed about 360 times by retail investors and 14 times by institutional buyers ahead of its debut according to the allotment results. NetEase’s shares closed at HK$130, 6% higher than its issue price of HK$123 on its debut day. 
In total, NetEase’s secondary listing issued 171,480,000 new ordinary shares, raising about USD2.7 billion which will be used for its globalization strategies and opportunities. There is also an over-allotment option comprising an additional 25,722,000 shares to be issued if exercised in full. 
JD.com, China’s No. 2 online retailer, will also debut in a secondary listing on the Hong Kong stock exchange on 18 June 2020, six years after its depository receipts were listed on Nasdaq in 2014. JD.com’s offering is also expected to garnered strong market interest as the offering is said to be oversubscribed by 179 times by retail investors and multiple times by institutional investors according to an article by South China Morning Post. 
In total, JD.com’s secondary listing issued 133,000,000 new ordinary Class A shares, raising about USD3.9 billion which will be used to invest in key supply chain based technology initiatives. There is also an over-allotment option comprising additional 19,950,000 shares to be issued if exercised in full. 
Both shares of NetEase and shares of JD.com listed in Hong Kong will be fully fungible with their respective American Depository Shares listed on Nasdaq.   
Investors can now gain exposure to NetEase and JD.com with SGX-listed Warrants and DLCs. Both DLCs and Warrants are leveraged instruments that allow investors to participate in the price performance of the underlying stock at a fraction of the underlying stock price. These instruments are usually traded over short periods of time to capture short-term trends. Specifications of 5x Long DLCs on NetEase and JD.com 
Long DLCs are for investors who have a bullish view of the underlying asset (i.e. the investor takes the view that the price of the underlying asset will go up). A summary of the terms is tabled below.

<table class="table table-striped"><tbody>
<tr>
<td>
			Counter name
			</td>
			<td>
			Code
			</td>
			<td>
			Underlying stock 
			</td>
			<td>
			Type
			</td>
			<td>
			Leverage 
			</td>
			<td>
			Issue Price (S$)
			</td>
			<td>
			Expiry Date
			</td>
		</tr>
<tr>
<td>
			DLC SG5xLong NetEase
			</td>
			<td>
			DNSW
			</td>
			<td>
			9999.HK
			</td>
			<td>
			Long
			</td>
			<td>
			5x
			</td>
			<td>
			0.50
			</td>
			<td>
			15 June 2023
			</td>
		</tr>
<tr>
<td>
			DLC SG5xLongNetEase A
			</td>
			<td>
			DNAW
			</td>
			<td>
			9999.HK
			</td>
			<td>
			Long
			</td>
			<td>
			5x
			</td>
			<td>
			2.50
			</td>
			<td>
			15 June 2023
			</td>
		</tr>
<tr>
<td>
			DLC SG5xLong JD
			</td>
			<td>
			DJCW
			</td>
			<td>
			9618.HK
			</td>
			<td>
			Long
			</td>
			<td>
			5x
			</td>
			<td>
			0.50
			</td>
			<td>
			15 June 2023
			</td>
		</tr>
<tr>
<td>
			DLC SG5xLongJD A
			</td>
			<td>
			DJDW
			</td>
			<td>
			9618.HK
			</td>
			<td>
			Long
			</td>
			<td>
			5x
			</td>
			<td>
			2.50
			</td>
			<td>
			15 June 2023
			</td>
		</tr>
</tbody></table>
 Source: SGX 
 

Societe Generale will be listing two DLCs for each underlying stock with one priced at $0.50 and the other at $2.50 to provide investors with more choice. While the $0.50 DLC is lower in price level, investors should note that it will also be lower in sensitivity to the underlying stock movement as compared to the $2.50 DLC. Despite the difference in issue price and sensitivity, both DLCs will replicate the daily performance of the underlying stock multiplied by the five times leverage factor. Apart from the difference in stock code, the letter "A” is also added to the product name for easy identification. 
Investors are advised to read the issuer documents found on SGX website <a href="https://www.sgx.com/securities/company-announcements?value=SG%20ISSUER&amp;type=company">here</a> or the issuer’s DLC website <a href="https://dlc.socgen.com/en/home">here</a> for the full details of the DLCs including the product features (e.g. compounding effect and airbag mechanism) and the risks before investing in the DLCs. Specifications of Call Warrants on NetEase and JD.com 
Call warrants are for investors who have a bullish view of the underlying asset (i.e. the investor takes the view that the price of the underlying asset will go up). A summary of the warrant terms is tabled below.

<table class="table table-striped"><tbody>
<tr>
<td>
			Counter name
			</td>
			<td>
			Code
			</td>
			<td>
			Underlying
			</td>
			<td>
			Type
			</td>
			<td>
			Exercise Price (HK$)
			</td>
			<td>
			Warrants per share
			</td>
			<td>
			Expiry Date
			</td>
		</tr>
<tr>
<td>
			NetEase150 MBeCW210202
			</td>
			<td>
			VDMW
			</td>
			<td>
			9999.HK
			</td>
			<td>
			Call
			</td>
			<td>
			150
			</td>
			<td>
			25
			</td>
			<td>
			2 February 2021
			</td>
		</tr>
<tr>
<td>
			NetEase180 MBeCW210202
			</td>
			<td>
			UPGW
			</td>
			<td>
			9999.HK
			</td>
			<td>
			Call
			</td>
			<td>
			180
			</td>
			<td>
			25
			</td>
			<td>
			2 February 2021
			</td>
		</tr>
<tr>
<td>
			JD MB eCW201202
			</td>
			<td>
			DYPW
			</td>
			<td>
			9618.HK
			</td>
			<td>
			Call
			</td>
			<td>
			320
			</td>
			<td>
			25
			</td>
			<td>
			2 December 2020
			</td>
		</tr>
<tr>
<td>
			JD MB eCW201103
			</td>
			<td>
			1W9W
			</td>
			<td>
			9618.HK
			</td>
			<td>
			Call
			</td>
			<td>
			288
			</td>
			<td>
			30
			</td>
			<td>
			3 November 2020
			</td>
		</tr>
</tbody></table>
 Source: SGX 
Investors should note these Warrants will track the moves in Netease/JD.com shares trading in Hong Kong, hence the market-making hours for these instruments will follow the stock’s trading hours on Hong Kong stock exchange from 9.30am to 4pm, with a break from 12-1pm. Note that this will also apply to the DLCs on NetEase/JD.com. 
Investors are advised to read the issuer documents found on SGX website <a href="https://www.sgx.com/securities/company-announcements?value=MACQUARIE%20BANK%20LIMITED&amp;type=company">here</a> or the issuer’s warrant website <a href="https://www.warrants.com.sg/home">here</a> for the full details of the warrants including the product features and the risks before investing in the warrants. DLCs and Warrants offer exposure to a wide selection of Asian stocks 
There 115 DLCs listed on SGX offering investors fixed leverage exposure to key Asian indices and single stock names. The Asian indices include MSCI Singapore, Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) while the single stock names comprise of 14 Singapore stocks (e.g. DBS, UOB, OCBC) and 20 Hong Kong names (e.g. Tencent, Ping An, Geely). 
Click <a href="https://dlc.socgen.com/en/product/search">here</a> to view the DLC screener. 
Similarly, there are close to 100 warrants listed on SGX offering investors exposure to a wide range of indices and single stock names. Indices include STI, HSI, Nikkei, S&amp;P500 indices while single stock names include STI constituents and Hong Kong names such as Tencent, Xiaomi and Haidilao. 
Click <a href="http://www.warrants.com.sg/tools/warrantsearch">here</a> to view the Warrant screener.   Specified Investment Products (SIP) 
Structured Warrants and Daily Leverage Certificates are for investors who are willing to accept the risk of substantial losses up to the principal investment amount, possibly within a very short timeframe. Investors should also have sufficient understanding of the product and should possess either a high level of knowledge or sufficient trading experience to properly evaluate and assess the product structure, associated risks, valuation, costs and expected returns. All investors need to be Specified Investment Products (SIP) qualified to invest in these instruments.
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As NetEase &amp; JD.com look to complete their secondary listings in Hong Kong, investors can now gain exposure to China’s second-largest gaming giant and China’s No. 2 online retailer respectively with SGX-listed Warrants and DLCs.  
	 
	
Issued by Societe Generale, the 5x Long DLCs on NetEase and JD.com will start trading on Thursday 18 June. Each underlying stock will have two Long DLCs with an issue price of S$0.50 and S$2.50 to offer investors more choice on price and sensitivity.  
	 
	Issued by Macquarie Bank, call warrants on NetEase started trading on 12 June while call warrants on JD.com will start trading on 18 June. Call warrants on NetEase have an exercise price of HKD150 and 180; Call warrants on JD.com have an exercise price of HKD288 and 320.

 
 Daily Leverage Certificates (“DLCs”) and Structured warrants (“Warrants”) are financial instruments issued by a third-party financial institution, usually investment banks, and are traded in the SGX securities market. DLCs and Warrants offer investors an alternative instrument to participate in the price performance of an underlying asset at a fraction of the underlying asset price. Any failure of the issuer or guarantor to perform obligations when due (e.g. issuer becomes insolvent), may result in the loss of an entire investment.  NetEase and JD.com posted strong YTD total returns  
NetEase and JD.com ADRs listed on Nasdaq has had a strong performance in 2020 thus far, posting year-to-date (YTD)  total returns of +36% and +69% respectively despite the dip in March, as the global economy took steps toward reopening and recovering from the COVID-19 pandemic.  



      
    
    Total return YTD


The top quartile of global stocks focused on software and e-commerce by market value have generated a median total return of 10% in the 2020 year through to 15 June. While these stocks generally trade at high P/E valuations, they also trade with above average volatility, with median volatility of 52% over the past 12 months.  
The two heavyweights, Microsoft Corporation and Amazon.com Inc, currently maintain a total of S$3.75 trillion in combined market cap, however the top quartile of global stocks focused on software and e-commerce by market value now include marginally more stocks domiciled in China than the US.    Secondary Listing of NetEase and JD.com oversubscribed multiple times  
Two decades after its depository receipts were listed on Nasdaq in 2000, NetEase, China’s second-largest gaming giant, has debuted in a secondary listing on the Hong Kong stock exchange on 11 June 2020. Garnering strong market interest, NetEase’s offering was oversubscribed about 360 times by retail investors and 14 times by institutional buyers ahead of its debut according to the allotment results. NetEase’s shares closed at HK$130, 6% higher than its issue price of HK$123 on its debut day.  
In total, NetEase’s secondary listing issued 171,480,000 new ordinary shares, raising about USD2.7 billion which will be used for its globalization strategies and opportunities. There is also an over-allotment option comprising an additional 25,722,000 shares to be issued if exercised in full.  
JD.com, China’s No. 2 online retailer, will also debut in a secondary listing on the Hong Kong stock exchange on 18 June 2020, six years after its depository receipts were listed on Nasdaq in 2014. JD.com’s offering is also expected to garnered strong market interest as the offering is said to be oversubscribed by 179 times by retail investors and multiple times by institutional investors according to an article by South China Morning Post.  
In total, JD.com’s secondary listing issued 133,000,000 new ordinary Class A shares, raising about USD3.9 billion which will be used to invest in key supply chain based technology initiatives. There is also an over-allotment option comprising additional 19,950,000 shares to be issued if exercised in full.  
Both shares of NetEase and shares of JD.com listed in Hong Kong will be fully fungible with their respective American Depository Shares listed on Nasdaq.    
Investors can now gain exposure to NetEase and JD.com with SGX-listed Warrants and DLCs. Both DLCs and Warrants are leveraged instruments that allow investors to participate in the price performance of the underlying stock at a fraction of the underlying stock price. These instruments are usually traded over short periods of time to capture short-term trends.  Specifications of 5x Long DLCs on NetEase and JD.com  
Long DLCs are for investors who have a bullish view of the underlying asset (i.e. the investor takes the view that the price of the underlying asset will go up). A summary of the terms is tabled below.




			Counter name
			
			
			Code
			
			
			Underlying stock 
			
			
			Type
			
			
			Leverage 
			
			
			Issue Price (S$)
			
			
			Expiry Date
			
		


			DLC SG5xLong NetEase
			
			
			DNSW
			
			
			9999.HK
			
			
			Long
			
			
			5x
			
			
			0.50
			
			
			15 June 2023
			
		


			DLC SG5xLongNetEase A
			
			
			DNAW
			
			
			9999.HK
			
			
			Long
			
			
			5x
			
			
			2.50
			
			
			15 June 2023
			
		


			DLC SG5xLong JD
			
			
			DJCW
			
			
			9618.HK
			
			
			Long
			
			
			5x
			
			
			0.50
			
			
			15 June 2023
			
		


			DLC SG5xLongJD A
			
			
			DJDW
			
			
			9618.HK
			
			
			Long
			
			
			5x
			
			
			2.50
			
			
			15 June 2023
			
		

 Source: SGX 
 

Societe Generale will be listing two DLCs for each underlying stock with one priced at $0.50 and the other at $2.50 to provide investors with more choice. While the $0.50 DLC is lower in price level, investors should note that it will also be lower in sensitivity to the underlying stock movement as compared to the $2.50 DLC. Despite the difference in issue price and sensitivity, both DLCs will replicate the daily performance of the underlying stock multiplied by the five times leverage factor. Apart from the difference in stock code, the letter "A” is also added to the product name for easy identification.  
Investors are advised to read the issuer documents found on SGX website here or the issuer’s DLC website here for the full details of the DLCs including the product features (e.g. compounding effect and airbag mechanism) and the risks before investing in the DLCs.  Specifications of Call Warrants on NetEase and JD.com  
Call warrants are for investors who have a bullish view of the underlying asset (i.e. the investor takes the view that the price of the underlying asset will go up). A summary of the warrant terms is tabled below.




			Counter name
			
			
			Code
			
			
			Underlying
			
			
			Type
			
			
			Exercise Price (HK$)
			
			
			Warrants per share
			
			
			Expiry Date
			
		


			NetEase150 MBeCW210202
			
			
			VDMW
			
			
			9999.HK
			
			
			Call
			
			
			150
			
			
			25
			
			
			2 February 2021
			
		


			NetEase180 MBeCW210202
			
			
			UPGW
			
			
			9999.HK
			
			
			Call
			
			
			180
			
			
			25
			
			
			2 February 2021
			
		


			JD MB eCW201202
			
			
			DYPW
			
			
			9618.HK
			
			
			Call
			
			
			320
			
			
			25
			
			
			2 December 2020
			
		


			JD MB eCW201103
			
			
			1W9W
			
			
			9618.HK
			
			
			Call
			
			
			288
			
			
			30
			
			
			3 November 2020
			
		

 Source: SGX  
Investors should note these Warrants will track the moves in Netease/JD.com shares trading in Hong Kong, hence the market-making hours for these instruments will follow the stock’s trading hours on Hong Kong stock exchange from 9.30am to 4pm, with a break from 12-1pm. Note that this will also apply to the DLCs on NetEase/JD.com.  
Investors are advised to read the issuer documents found on SGX website here or the issuer’s warrant website here for the full details of the warrants including the product features and the risks before investing in the warrants.  DLCs and Warrants offer exposure to a wide selection of Asian stocks  
There 115 DLCs listed on SGX offering investors fixed leverage exposure to key Asian indices and single stock names. The Asian indices include MSCI Singapore, Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) while the single stock names comprise of 14 Singapore stocks (e.g. DBS, UOB, OCBC) and 20 Hong Kong names (e.g. Tencent, Ping An, Geely).  
Click here to view the DLC screener.  
Similarly, there are close to 100 warrants listed on SGX offering investors exposure to a wide range of indices and single stock names. Indices include STI, HSI, Nikkei, S&amp;P500 indices while single stock names include STI constituents and Hong Kong names such as Tencent, Xiaomi and Haidilao.  
Click here to view the Warrant screener.    Specified Investment Products (SIP)  
Structured Warrants and Daily Leverage Certificates are for investors who are willing to accept the risk of substantial losses up to the principal investment amount, possibly within a very short timeframe. Investors should also have sufficient understanding of the product and should possess either a high level of knowledge or sufficient trading experience to properly evaluate and assess the product structure, associated risks, valuation, costs and expected returns. All investors need to be Specified Investment Products (SIP) qualified to invest in these instruments.



Gain Exposure to NetEase & JD.com with SGX-listed Warrants & DLCs 

Hong Kong

Great Wall Pan Asia Holdings Limited operates as a holding company. The Company, through its subsidiaries, owns a diversified portfolio of real estate assets in Hong Kong.

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Great Wall Pan Asia Holdings L (583 HK)

Gain Exposure to NetEase & JD.com with SGX-listed Warrants & DLCs

As NetEase & JD.com look to complete their secondary listings in Hong Kong, investors can now gain exposure to China’s second-largest...

Singapore Exchange Ltd (SGX)

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