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

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The STI has started 2021 as Asia’s best-performer in the year to date with a 9% return, and the NIKKO AM Singapore STI ETF and SPDR STI ETF drawing S$63 million of inflows. This has coincided with DBS, OCBC and UOB being recipient to S$1.3 billion of net institutional inflows.  
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The higher 10-year UST yields have not only buoyed global banking stocks, the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF, have seen a combined S$60 million of inflows, boosting their combined AUM to S$1.6 billion.  
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	<li>The SPDR Gold ETF has seen comparatively more marginal inflows of S$6 million, with the safe-haven market declining 9% in the 2021 YTD, following a 21% gain in SGD terms in 2020. Gold has a history of being one of the Singapore’s most held ETFs by AUM.</li>
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For much of the past 12 months, the impacts of COVID-19 were clear overarching economic themes, and by extension the overarching market drivers. Daily confirmed global COVID-19 cases have fallen from more than 800,000 on 7 January to less than 300,000 on 8 March.  As of 8 March, more than 300 million single doses of the vaccine have been administered this year. 
With these developments increasingly priced into global markets this year, the approaching return to a new level of social and economic normalisation has established a number of sub-drivers. This has had a significant impact on comparative sector performances and cross-asset flows. The eventuality has gradually been priced in to the UST yield curve, with 2-year UST yields remaining sub 0.2%, while 10-year UST yields have risen from 0.9% at the end of 2020 to 1.5% at present. The yield curve development has also had a significant impact in the Singapore-focused Exchange Traded Funds (ETFs). Within the Financial Sector, the key beneficiary of higher yields, global banks, have rallied while the less benefited Real Estate stocks and REITS remained flat. This has propelled the Straits Times Index (“STI”) to be Asia’s best-performing equity benchmark in the 2021 year to date with a 9% return, with the SPDR STI ETF and NIKKO AM Singapore STI ETF seeing a combined S$63 million in fund inflows. At the same time the higher yields have coincided with a similar level of inflows into the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF, while the SPDR Gold ETF has seen comparatively more marginal inflows. Together these five ETFs currently make up 59% of the combined AUM of the 30 ETFs listed for trading on SGX.
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 <div class='content-caption'>ETF AUM</div>
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With both ETFs recipient to inflows in the 2021 year to date, the AUM declines of the ABF Singapore Bond Index Fund ETF and the SPDR Gold ETF have been on the back of declines in unit prices, which were 4.7% and 8.5% respectively.  
The Nikko AM SGD IG Corp Bond ETF saw a 1.3% decline in the 2021 year-to-date. Note that the declines of both Bond ETFs take into account a dividend distribution in January. The indicative dividend yield is currently is currently 2.8% for the Nikko AM SGD IG Corp Bond ETF and 2.1% for the ABF Singapore Bond Index Fund ETF. Singapore investors can include these five ETFs in both of their CPF Investment Scheme and SRS portfolios.  
 

Diversified Returns of Five ETFs Provided Portfolio 
With the five ETFs currently maintaining a combined AUM of S$5.2 billion, the SPDR STI ETF and NIKKO AM Singapore STI ETF make up 43% of this combined AUM, the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF make up a combined 30%, with the SPDR Gold ETF making up the balance of 27%. An ETF portfolio that was weighed in such a manner would have returned a 0.5% return in the 2021 year to 9 March and a 6.2% return over the past 12 months. The return over the 12 month period exemplified the role diversified portfolios can have in reducing the impacts of broad market volatility. 
As discussed <a href="https://www.sgx.com/research-education/market-updates/20200812-recent-growth-singapore-stocks-bonds-and-gold-portfolios">here</a> ETF portfolios that resembled the composition of the relative AUM of the five ETFs at the end of 2019, similarly weighted with 30% STI ETFs, 35% Singapore Bond ETFs and 35% Gold ETFs, generated a defensive 9% total return for the 2020 year through to 11 August. This was mainly on the exposure the Gold ETF. The combined AUM of the two STI ETF’s has since grown, and surpassed the S$2.0 billion threshold in November 2020. 
The SPDR GOLD ETF now maintains the third highest AUM of the 30 ETFs listed for trading in Singapore, down from maintaining the highest AUM of all the Singapore listed ETFs at the end of 2019.  Currently, the SPDR STI ETF maintains the highest AUM of the 30 ETFs listed in Singapore. For the moment, the US 2/10 yield curve is much more of a market focus than a Federal Reserve Focus. As noted above, global bank stocks have benefitted from the yield curve repricing since the end of 2020, while global real estate stocks, including REITs have been largely flat. US Commercial Banks continue to parallel the expansionary measures of the Federal Reserve, and the US economy is set to receive the third round of fiscal stimulus, which the Chair of the Federal Reserve has consistently made calls for.  Nevertheless, the 16 – 17 March FOMC will likely see a re-opening of the yield curve targeting discussion, after FOMC minutes showed its merits were discussed and mostly discounted in mid-2020.
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The STI has started 2021 as Asia’s best-performer in the year to date with a 9% return, and the NIKKO AM Singapore STI ETF and SPDR STI ETF drawing S$63 million of inflows. This has coincided with DBS, OCBC and UOB being recipient to S$1.3 billion of net institutional inflows.   
	 
	
The higher 10-year UST yields have not only buoyed global banking stocks, the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF, have seen a combined S$60 million of inflows, boosting their combined AUM to S$1.6 billion.   
	 
	The SPDR Gold ETF has seen comparatively more marginal inflows of S$6 million, with the safe-haven market declining 9% in the 2021 YTD, following a 21% gain in SGD terms in 2020. Gold has a history of being one of the Singapore’s most held ETFs by AUM.

 

For much of the past 12 months, the impacts of COVID-19 were clear overarching economic themes, and by extension the overarching market drivers. Daily confirmed global COVID-19 cases have fallen from more than 800,000 on 7 January to less than 300,000 on 8 March.  As of 8 March, more than 300 million single doses of the vaccine have been administered this year.  
With these developments increasingly priced into global markets this year, the approaching return to a new level of social and economic normalisation has established a number of sub-drivers. This has had a significant impact on comparative sector performances and cross-asset flows. The eventuality has gradually been priced in to the UST yield curve, with 2-year UST yields remaining sub 0.2%, while 10-year UST yields have risen from 0.9% at the end of 2020 to 1.5% at present.  The yield curve development has also had a significant impact in the Singapore-focused Exchange Traded Funds (ETFs). Within the Financial Sector, the key beneficiary of higher yields, global banks, have rallied while the less benefited Real Estate stocks and REITS remained flat. This has propelled the Straits Times Index (“STI”) to be Asia’s best-performing equity benchmark in the 2021 year to date with a 9% return, with the SPDR STI ETF and NIKKO AM Singapore STI ETF seeing a combined S$63 million in fund inflows. At the same time the higher yields have coincided with a similar level of inflows into the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF, while the SPDR Gold ETF has seen comparatively more marginal inflows. Together these five ETFs currently make up 59% of the combined AUM of the 30 ETFs listed for trading on SGX.



      
    
    ETF AUM


With both ETFs recipient to inflows in the 2021 year to date, the AUM declines of the ABF Singapore Bond Index Fund ETF and the SPDR Gold ETF have been on the back of declines in unit prices, which were 4.7% and 8.5% respectively.   
The Nikko AM SGD IG Corp Bond ETF saw a 1.3% decline in the 2021 year-to-date. Note that the declines of both Bond ETFs take into account a dividend distribution in January. The indicative dividend yield is currently is currently 2.8% for the Nikko AM SGD IG Corp Bond ETF and 2.1% for the ABF Singapore Bond Index Fund ETF. Singapore investors can include these five ETFs in both of their CPF Investment Scheme and SRS portfolios.  
 

Diversified Returns of Five ETFs Provided Portfolio   
With the five ETFs currently maintaining a combined AUM of S$5.2 billion, the SPDR STI ETF and NIKKO AM Singapore STI ETF make up 43% of this combined AUM, the ABF Singapore Bond Index Fund ETF and the Nikko AM SGD IG Corp Bond ETF make up a combined 30%, with the SPDR Gold ETF making up the balance of 27%. An ETF portfolio that was weighed in such a manner would have returned a 0.5% return in the 2021 year to 9 March and a 6.2% return over the past 12 months. The return over the 12 month period exemplified the role diversified portfolios can have in reducing the impacts of broad market volatility.  
As discussed here ETF portfolios that resembled the composition of the relative AUM of the five ETFs at the end of 2019, similarly weighted with 30% STI ETFs, 35% Singapore Bond ETFs and 35% Gold ETFs, generated a defensive 9% total return for the 2020 year through to 11 August. This was mainly on the exposure the Gold ETF. The combined AUM of the two STI ETF’s has since grown, and surpassed the S$2.0 billion threshold in November 2020.  
The SPDR GOLD ETF now maintains the third highest AUM of the 30 ETFs listed for trading in Singapore, down from maintaining the highest AUM of all the Singapore listed ETFs at the end of 2019.  Currently, the SPDR STI ETF maintains the highest AUM of the 30 ETFs listed in Singapore.  For the moment, the US 2/10 yield curve is much more of a market focus than a Federal Reserve Focus. As noted above, global bank stocks have benefitted from the yield curve repricing since the end of 2020, while global real estate stocks, including REITs have been largely flat. US Commercial Banks continue to parallel the expansionary measures of the Federal Reserve, and the US economy is set to receive the third round of fiscal stimulus, which the Chair of the Federal Reserve has consistently made calls for.  Nevertheless, the 16 – 17 March FOMC will likely see a re-opening of the yield curve targeting discussion, after FOMC minutes showed its merits were discussed and mostly discounted in mid-2020.



Singapore Equity, Bond & Gold ETFs Continue to Draw YTD Inflows 