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.

Asia’s leading multi-asset exchange

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

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up





The AUM of the iShares USD Asia High Yield Bond ETF surpassed S$1.0 billion last week. With an investment focus on more than 300 high yield bonds across Asia Ex-Japan, the ETF has generated 6.2% average annualised SGD total returns since its inception in Dec 2011.    
	 
	
With ~42% exposure to China Bonds and 27% to China Property Plays, the ETF has declined 7.9% in SGD terms since the end of June. On the back of the decline, the price ratio of the iShares USD Asia High Yield Bond ETF to the more globally focused iShares iBoxx High Yield Corporate Bond ETF is trading at historical lows.  
	 
	This has seen the iShares USD Asia High Yield Bond ETF attract net inflows of S$855 million in 3Q21. The unit price declines has also taken the trailing 12M yield of the ETF to 6.0%, which is the highest yielding ETF listed for trading in Singapore. The ETF distributes dividends on a quarterly basis. 

 

Leading the ETF inflows in September, the AUM of the iShares USD Asia High Yield Bond ETF surpassed S$1.0 billion last week with as much as S$855 million of inflows in 3Q21. The Fixed Income ETF focuses on the performance of more than 300 high yielding corporate bonds, listed across Asia Ex-Japan, with the majority of the bonds currently maintaining yields between 1% and 8%.   
According to iShares, the Asia Credit market spans over ~680 distinct issuers and a market value of ~US$1 trillion. The High Yield segment of the Asia Ex-Japan Corporate Bond that is denominated in USD maintains a market value of ~US$300 billion, with approximately half that value contributed by high yield corporate bonds issued in China. This forms the basis of the Barclays Asia USD High Yield Diversified Credit Index which is the underlying Index for the iShares USD Asia High Yield Bond ETF.   
Since 30 June, the iShares USD Asia High Yield Bond ETF has declined 8.7% in USD terms, while the iShares iBoxx High Yield Corporate Bond ETF, with its global focus, declined 1.1%. While the performance differential is ~7%, with the 90-day volatility of the iShares USD Asia High Yield Bond ETF also at 7%, the price ratio between the two ETFs has recently traded at historical lows. On 4 Oct, the price ratio spread of the iShares USD Asia High Yield Bond ETF (US$9.26) to the iShares iBoxx High Yield Corporate Bond ETF (US$87.10), made a fresh all-time low of 0.1063. On a shorter-term basis, at 0.1063, the price ratio spread is also trading at more than two standard deviations below the 6-month mean (0.1067), with the current 6-month mean at 0.1147. The relative pricing of the iShares USD Asia High Yield Bond ETF to its global-facing peer has coincided with a surge in trading turnover and over US$600 million of inflows into the iShares USD Asia High Yield Bond ETF in September.  



      
    
    iShares iBoxx High Yield Corporate Bond ETF


The rotation to the iShares USD Asia High Yield Bond ETF has not extended to China Government Bond ETFs. The ICBC CSOP FTSE Chinese Government Bond ETF (click here for more) booked net outflows of S$18 million in 3Q21, while the Nikko AM – ICBC SG China Bond ETF SGD Class booked inflows of S$1 million.   
The iShares USD Asia High Yield Bond ETF has declined 8.7% in USD terms from 30 June through to 4 Oct, with a dividend distribution trimming the decline in total return to 7.7%. In SGD terms, this represents a 7.9% price decline and a 6.9% decline in total return. 

The decline in the iShares USD Asia High Yield Bond ETF in the 3Q21, was on the back of the decline in the price of High Yield Corporate Bonds in China, particularly across the China property sector. This is because:



As of 30 Sep, the iShares USD Asia High Yield Bond ETF carried a 42% exposure to China and a 10% exposure to Hong Kong. India and Macau exposures were 15% and 7% respectively, while across ASEAN the ETF maintained the most exposure to the Philippines at 6%, with the next highest exposures to Indonesia at 5%, Thailand at 3%, Singapore 1% and Vietnam at 1%. Other geographic exposures include Sri Lanka, Pakistan, Mongolia, South Korea and Malaysia. Non-China issuers (~58%) maintain an average yield of 5.8%.

 



Within the 42% exposure to China, 65% was invested in China property play (27% of overall fund), with a direct exposure of 4.1% to China Evergrande Group (1.7% of overall fund) as of 30 Sep. The recent concerns on China Evergrande Group’s ability to service its debt obligations saw the price of the China Evergrande Group Corporate Bond declining over 70% from ~75c at the end of June to ~22c as of 30 Sep. The average price of the Corporate Bonds issued by the China property plays has also been impacted, declining from 94c at the end of June to 82c as of 30 Sep. This has seen the average yield of the China segment of the iShares USD Asia High Yield Bond ETF gain over 3% from 10.2% on 30 June to 13.3% as of 30 Sep. 


 



The volatility in the China Corp Bonds, on the back of the Evergrande concerns have created a dislocation in the comparative yields, which has been the primary attraction of the ETF in recent weeks, which has seen the AUM of the ETF reach S$1.2 billion. While the AUM has grown significantly from near S$150 million at the end of 2020, it is still has some way to go to be on par with the US-listed iShares iBoxx High Yield Corporate Bond ETF which maintains an AUM of more than S$25.0 billion.

Nevertheless, the iShares USD Asia High Yield Bond ETF is currently providing higher yield with historically lower volatility and more stable default rates relative to developed markets and other emerging market exposures. It targets exposure to a representative universe of more than 300 high yield bonds, thus reducing idiosyncratic risk of individual bonds. In terms of ratings, close to 43% of the portfolio is rated BB, with 30% of the portfolio rated B, with 6% rated CCC and below, while remaining 20% of the portfolio are not rated. The current yield to maturity of the ETF which holds approximately 364 constituents (as of 30 Sep) is 9.3%, based on the Bloomberg YAS yield, while the effective duration of the portfolio, which represents the change in the bond prices for a 1% change in yields, is 3.25 years.  
The AUM of the suite of ETFs listed in Singapore in addition to the 3Q21 inflows are tabled below.




			ETF Name
			
			
			Primary Code
			
			
			Sec Code
			
			
			Fund Focus
			
			
			Issuer
			
			
			Total Expense Ratio %
			
			
			2020 CY Inflows (S$M)
			
			
			1Q21 Inflows (S$M)
			
			
			2Q21 Inflows (S$M)
			
			
			3Q21 Inflows (S$M)
			
			
			2021 CYTD Inflows (S$M)
			
			
			AUM S$M
			
		


			ICBC CSOP FTSE Chinese Government Bond ETF
			
			
			CYC
			
			
			CYB
			
			
			China Bonds
			
			
			CSOP AM
			
			
			0.25
			
			
			1505
			
			
			95
			
			
			249
			
			
			-18
			
			
			326
			
			
			1959
			
		


			SPDR® Straits Times Index ETF
			
			
			ES3
			
			
			 
			
			
			Singapore Equities
			
			
			SPDR
			
			
			0.30
			
			
			777
			
			
			-47
			
			
			-55
			
			
			14
			
			
			-88
			
			
			1650
			
		


			ABF Singapore Bond Index Fund
			
			
			A35
			
			
			 
			
			
			Singapore Bonds
			
			
			Nikko AM
			
			
			0.25
			
			
			21
			
			
			36
			
			
			10
			
			
			40
			
			
			87
			
			
			1036
			
		


			Nikko AM SGD Investment Grade Corporate Bond ETF
			
			
			MBH
			
			
			 
			
			
			Singapore Bonds
			
			
			Nikko AM
			
			
			0.30
			
			
			80
			
			
			35
			
			
			-14
			
			
			-9
			
			
			11
			
			
			597
			
		


			Nikko AM Singapore STI ETF
			
			
			G3B
			
			
			 
			
			
			Singapore Equities
			
			
			Nikko AM
			
			
			0.30
			
			
			170
			
			
			34
			
			
			21
			
			
			19
			
			
			74
			
			
			590
			
		


			NikkoAM-StraitsTrading Asia ex Japan REIT ETF
			
			
			CFA
			
			
			COI
			
			
			Asia Ex-Japan REITs
			
			
			Nikko AM
			
			
			0.60
			
			
			66
			
			
			48
			
			
			42
			
			
			-10
			
			
			78
			
			
			323
			
		


			NikkoAM-ICBCSG China Bond ETF SGD Class*
			
			
			ZHS
			
			
			 
			
			
			China Bonds
			
			
			Nikko AM
			
			
			0.30
			
			
			43
			
			
			9
			
			
			5
			
			
			1
			
			
			14
			
			
			60
			
		


			NikkoAM-ICBCSG China Bond ETF RMB Class*
			
			
			ZHY
			
			
			ZHD
			
			
			China Bonds
			
			
			Nikko AM
			
			
			0.30
			
			
			218
			
			
			 
			
			
			 
			
			
			 
			
			
			1
			
			
			236
			
		


			Lion-Phillip S-REIT ETF
			
			
			CLR
			
			
			 
			
			
			Singapore REITs
			
			
			LGI
			
			
			0.60
			
			
			41
			
			
			21
			
			
			9
			
			
			7
			
			
			37
			
			
			224
			
		


			Lion-OCBC Securities Hang Seng TECH ETF
			
			
			HST
			
			
			HSS
			
			
			China Equities
			
			
			LGI
			
			
			0.68
			
			
			92
			
			
			91
			
			
			58
			
			
			103
			
			
			252
			
			
			273
			
		


			Lion-OCBC China Leaders ETF
			
			
			YYY
			
			
			YYR
			
			
			China Equities
			
			
			LGI
			
			
			0.62
			
			
			 
			
			
			 
			
			
			 
			
			
			93
			
			
			93 
			
			
			96
			
		


			iShares Barclays USD Asia High Yield Bond Index ETF
			
			
			O9P
			
			
			QL3
			
			
			Asia Ex-Japan Bonds
			
			
			Blackrock
			
			
			0.50
			
			
			40
			
			
			68
			
			
			92
			
			
			855
			
			
			1015
			
			
			1178
			
		


			iShares MSCI India Index ETF
			
			
			I98
			
			
			QK9
			
			
			India Equities
			
			
			Blackrock
			
			
			1.03
			
			
			-25
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			144
			
		


			iShares Asia Credit ETF
			
			
			N6M
			
			
			QL2
			
			
			Asia Ex-Japan Bonds
			
			
			Blackrock
			
			
			0.30
			
			
			25
			
			
			5
			
			
			8
			
			
			10
			
			
			23
			
			
			105
			
		


			Phillip SGD Money Market ETF
			
			
			MMS
			
			
			MMT
			
			
			SGD Money Market
			
			
			Phillip
			
			
			0.24
			
			
			120
			
			
			-1
			
			
			-3
			
			
			-1
			
			
			-5
			
			
			116
			
		


			Phillip Sing Income ETF
			
			
			OVQ
			
			
			 
			
			
			Singapore Equities
			
			
			Phillip
			
			
			0.97
			
			
			14
			
			
			 
			
			
			3
			
			
			 
			
			
			3
			
			
			63
			
		


			Phillip APAC DIV REIT Leader ETF
			
			
			BYI
			
			
			BYJ
			
			
			APAC Ex-Japan REITs
			
			
			Phillip
			
			
			0.91
			
			
			 
			
			
			 
			
			
			2
			
			
			 
			
			
			2
			
			
			23
			
		


			UNITED SSE 50 CHINA ETF
			
			
			JK8
			
			
			 
			
			
			China Equities
			
			
			UOBAM
			
			
			2.28
			
			
			-6
			
			
			1
			
			
			 
			
			
			1
			
			
			2
			
			
			27
			
		


			Principal S&amp;P APAC Dividend ETF
			
			
			P5P
			
			
			QR9
			
			
			APAC Ex-Japan Equities
			
			
			PAM
			
			
			1.06
			
			
			3
			
			
			 
			
			
			2
			
			
			 
			
			
			2
			
			
			22
			
		


			Principal FTSE ASEAN40 ETF
			
			
			M62
			
			
			QS0
			
			
			ASEAN Equities
			
			
			PAM
			
			
			0.80
			
			
			-1
			
			
			-9
			
			
			 
			
			
			 
			
			
			-9
			
			
			11
			
		


			SPDR GLD ETF
			
			
			O87
			
			
			 
			
			
			Gold
			
			
			SPDR
			
			
			0.40
			
			
			-250
			
			
			-1
			
			
			-43
			
			
			-38
			
			
			-83
			
			
			1358
			
		


			SPDR S&amp;P 500 ETF
			
			
			S27
			
			
			 
			
			
			US Equities
			
			
			SPDR
			
			
			0.09
			
			
			15
			
			
			5
			
			
			4
			
			
			6
			
			
			15
			
			
			63
			
		


			SPDR®  DJIA ETF TRUST
			
			
			D07
			
			
			 
			
			
			US Equities
			
			
			SPDR
			
			
			0.17
			
			
			1
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			4
			
		


			Xtrackers MSCI China UCITS ETF
			
			
			LG9
			
			
			TID
			
			
			China Equities
			
			
			XTrackers
			
			
			0.65
			
			
			29
			
			
			8
			
			
			9
			
			
			17
			
			
			34
			
			
			67
			
		


			Xtrackers MSCI Singapore UCITS ETF
			
			
			O9A
			
			
			 
			
			
			Singapore Equities
			
			
			XTrackers
			
			
			0.50
			
			
			-1
			
			
			-2
			
			
			 
			
			
			1
			
			
			-1
			
			
			15
			
		


			Xtrackers II Singapore Government Bond UCITS ETF
			
			
			KV4
			
			
			 
			
			
			Singapore Bonds
			
			
			XTrackers
			
			
			0.20
			
			
			-6
			
			
			 
			
			
			-2
			
			
			 
			
			
			-2
			
			
			129
			
		


			Xtrackers MSCI Indonesia Swap UCITS ETF
			
			
			KJ7
			
			
			 
			
			
			Indonesia Equities
			
			
			XTrackers
			
			
			0.65
			
			
			-7
			
			
			-6
			
			
			3
			
			
			2
			
			
			-1
			
			
			18
			
		


			Xtrackers FTSE Vietnam Swap UCITS ETF
			
			
			HD9
			
			
			 
			
			
			Vietnam Equities
			
			
			XTrackers
			
			
			0.85
			
			
			-4
			
			
			1
			
			
			3
			
			
			-1
			
			
			2
			
			
			18
			
		


			Lyxor MSCI AC Asia Pacific Ex Japan UCITS ETF - USD
			
			
			P60
			
			
			 
			
			
			APAC Ex-Japan Equities
			
			
			Lyxor
			
			
			0.60
			
			
			-12
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			26
			
		


			Lyxor MSCI India UCITS ETF - Acc USD
			
			
			G1N
			
			
			 
			
			
			India Equities
			
			
			Lyxor
			
			
			0.85
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			16
			
		


			Lyxor MSCI Emerging Markets UCITS ETF - Acc USD
			
			
			H1N
			
			
			 
			
			
			EM Equities
			
			
			Lyxor
			
			
			0.55
			
			
			 
			
			
			 
			
			
			2
			
			
			 
			
			
			2
			
			
			8
			
		


			Lyxor China Enterprise (HSCEI) UCITS ETF - USD
			
			
			P58
			
			
			 
			
			
			China Equities
			
			
			Lyxor
			
			
			0.65
			
			
			-119
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			34
			
		


			Total 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			2829
			
			
			391
			
			
			405
			
			
			1089
			
			
			1885
			
			
			10492
			
		

 ** Note the NikkoAM-ICBC SG China Bond ETF has dual class units - SGD (pay dividend) &amp; RMB (accumulating).

Source: SGX, Refinitiv, Bloomberg (Data as of 30 September 2021)

 

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. As with other securities, ETFs maintain market risks with the underlying index tracked by the ETF susceptible to market volatility. Changes of market conditions can affect the price of the underlying, which constitutes the NAV of the ETF, leading to a change in price of the ETF. To find out more about ETFs, click here. 



iShares USD Asia High Yield Bond ETF Surpasses S$1 Bn in AUM

Blackrock Inc

iShares USD Asia High Yield Bond ETF Surpasses S$1 Bn in AUM