|10 November 2017|
|STI’s 29 Month High Sees Stronger Product Participation|
Two STI ETFs: SPDR® STI ETF and Nikko AM STI ETF
The Straits Times Index (STI) bullish run in the year to date has generated much interest in the two STI Exchange Traded Funds (ETFs) listed on SGX. The combined AUM grew by 36% since the start of the year to reach US$636 million as of end October as investor seek an efficient way to invest in the STI. The two STI ETFs - SPDR® STI ETF (stock code: ES3) and Nikko AM STI ETF (G3B) - have registered price gains that are in line with the STI Index’s 18.9% gain in 2017 year-to-date. The chart below illustrates the price gains and total return of the STI index and the two STI ETFs year-to-date.
A popular method of investing in the STI is making use of the Regular Share Savings Plan to dollar cost average on the STI ETF. There are four RSS Plan providers in the Singapore market. They are Phillip Capital (launched in February 2002), POSB, OCBC Bank and Maybank Kim Eng (most recent to launch in early 2015). All four providers provide access to investing in the STI ETF and Singapore blue chip stocks from just S$100 a month. To read more about an earlier market update on dollar cost averaging on the STI ETF, click here
Leveraged Product: 5x Long and Short SiMSCI DLCs
The MSCI Singapore Index (SiMSCI), which is highly correlated to the STI, has generated a price gain of 20.1% and total return of 23.9% in the 2017 year-to-date. The SiMSCI has 27 constituents while the STI has 30 constituents. Investors can access the list of SiMSCI constituents here.
The newest product class on SGX – Daily Leverage Certificates (DLCs) – have generated more than S$1.27 billion in its launch. More than 70% of the DLC turnover was in 5x Long and Short DLCs tracking the SiMSCI with the remainder largely from DLCs on the Hang Seng Index.
Daily Leverage Certificates (DLCs) offer investors fixed leverage of 3x or 5x of the daily performance of the underlying index, be it a rising or falling market. The basic principle is simple - if the SiMSCI moves by 1% from its closing price of the previous trading day, the value of the 5x SiMSCI DLC will move by 5%.
Investors can buy the 5x Long SiMSCI DLC to benefit from bullish movements in the SiMSCI and conversely investors can buy the 5x Short DLC to benefit from bearish movements. Tabled below are the full month October and November month-to-date price gains of the SiMSCI compared with the SiMSCI DLCs.
Source: SGX, Bloomberg (data as of 9 November 2017)
*Price gains are calculated based on last bid prices
STI Warrants and Singapore Bank Warrants
The end of October saw the expiry quite of a number of STI and the local bank warrants. Macquarie has since listed new warrants on the STI and the local banks with more listings coming up next week. In the first 7 trading days of November, trading activity on the STI and Singapore bank warrants has largely been on the Call Warrants as the underlyings continue to make new highs.
The pie charts below illustrates the percentage of trading activity on the Call versus Put Warrants for the first 7 trading days of November for each of the local underlyings while the table below lists the Singapore warrants listed on SGX.
Table below are the STI and Singapore bank warrants listed for trading and upcoming listings.
Source: SGX, Bloomberg (data as of 09 November 2017)
Specified Investment Products
Structured warrants and Daily Leverage Certificates are examples of Specified Investment Products (SIPs). The MAS has introduced measures for intermediaries to safeguard the interests of individual investors investing in SIPs, which are products with features that might be more complex in nature. Investors now have the opportunity to assess their qualifications to trade SIP or enhance their product knowledge through the SGX online portal available here. Speak to your broker to find out how you can qualify to trade SIPs.
Education and Resources
SGX’s investor education portal with market, product and investment information and events. Sign up now at sgx.com/mygateway to receive our investment updates and economic calendar.
This document is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Singapore Exchange Limited (“SGX”) to any registration or licensing requirement. This document is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document is for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Use of and/or reliance on this document is entirely at the reader’s own risk. Further information on this investment product may be obtained from www.sgx.com. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Examples provided are for illustrative purposes only. While each of SGX and its affiliates (collectively, the “SGX Group Companies”) have taken reasonable care to ensure the accuracy and completeness of the information provided, each of the SGX Group Companies disclaims any and all guarantees, representations and warranties, expressed or implied, in relation to this document and shall not be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind, including without limitation loss of profit, loss of reputation and loss of opportunity) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information, or arising from and/or in connection with this document. The information in this document may have been obtained via third party sources and which have not been independently verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties. The SGX Group Companies may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document is subject to change without notice. This document shall not be reproduced, republished, uploaded, linked, posted, transmitted, adapted, copied, translated, modified, edited or otherwise displayed or distributed in any manner without SGX’s prior written consent.
Nikkei owns the copyright and any other intellectual property rights in the Nikkei Stock Average itself, and the method for calculating the Nikkei Stock Average and the like. All ownership of trademarks and any other intellectual property rights with respect to marks representing "Nikkei Inc.," "Nikkei," and "Nikkei Stock Average" belongs to Nikkei. Nikkei is not obliged to continuously publish the Nikkei Stock Average, nor is it liable for any error or delay in, or discontinuation of the publication thereof. Nikkei owns the right to change the content of the Nikkei Stock Average, such as the calculation method thereof, and the right to suspend the publication thereof. Nikkei does not give any warranty, nor is it responsible for any and all financial instruments and the like, which are based on, or otherwise refer to, the Nikkei Stock Average.
All rights in the FTSE China A50 Index (the “Index”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trademark of the London Stock Exchange Group companies and is used by FTSE under license.
The SGX FTSE China A50 Index Futures (the "Product") has been developed solely by Singapore Exchange Derivatives Trading Limited. The Index is calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Product and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Product. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Product or the suitability of the Index for the purpose to which it is being put by Singapore Exchange Derivatives Trading Limited.
Futures or options contract on any MSCI Index are not sponsored, guaranteed, endorsed, sold or promoted by MSCI, any affiliate of MSCI or any other party involved in, or related to, making or compiling any indexes (but expressly including the exchange) MSCI bears no liability of any kind with respect to such contracts