OREANDA-NEWS. SGX Derivatives Sets a New Single-Day Volume Record of 1.8 Million Contracts.

Remarkable Trading Interest

On 27 April 2015, a strong surge in trading flows led to a new single-day volume record of 1.8 million contracts. Besides the SGX FTSE China A50 futures, the steady growth of SGX’s India-related products also powered the increase in SGX’s derivative volumes.

Growth trend of SGX Equity Derivatives

The first quarter of 2015 witnessed the SGX CNX Nifty Index Futures recording 5.7 million traded contracts, a jump of 20.2 % from 4.7 million in the last quarter of 2014.

Volume of SGX Nifty Index Futures

Another winner was the SGX INR/USD Futures contract with volume leaping to 610,003 in the first quarter of 2015 –almost double that of 4Q2014’s 353,723.

FTSE China A50 Index Futures Top One Million

SGX FTSE China A50 Futures contracts recorded an unprecedented 1,040,772 contracts changing hands on 28 April 2015 (Day Session).

Volume of the China A50 Index futures had rallied since the last quarter of 2014. The first quarter of 2015 further validated the status of the product with an aggregate of 17.9 million contracts traded, up from 17.4 million in the preceding quarter. Monthly volume topped 8.3 million as at 28 April 2015, representing a surge of 19.09% as compared with 6.9 million in March 2015.

Daily average volume of the China A50 Index futures jumped to 435,721 (as at 28 April 2015) – a 38% increase from March.   

Daily Derivatives Volume of SGX FTSE China A50 Index Futures

The robust trading interest in the SGX FTSE China A50 Index futures boosted volume of the SGX’s suite of derivatives products. For the first quarter, SGX booked a total of 38 million futures contracts (excluding commodities) traded despite shorter trading days in February.

Monetary Easing and Policy Changes Drive Emerging Markets

A surprise cut in the reserve requirement ratio (RRR) signalled Beijing’s determination to boost the economy which grew at a low of 7% in the first quarter.

On 20 April, the People's Bank of China (PBOC) lowered the RRR for all banks by 100 basis points to 18.5%, the single largest cut since 2008.

Despite the rate cut, there is still room for further easing in the world’s second largest economy. 

"We have room in the reserve ratio and our interest rates are not zero yet,” said central bank Governor Zhou Xiaochuan, said in a brief interview with Bloomberg on 18 April.

Further hopes of stimulus, as well as reforms, underpinned the continued rally in China’s equities markets. Since 17 November, the opening of the Stock Connect and swift financial reforms have resulted in China’s equity market transforming into the second largest in the world, with turnover exceeding that of the US on a number of days. 

On the India front, Moody's ratings revised India's sovereign rating outlook from "stable" to "positive" on 8 April. Separately, the Organisation for Economic Co-operation and Development (OECD) forecasted India’s economic expansion to continue at 7.4% this fiscal year. This makes India the fastest-growing economy in the world.

In spite of the international accolades, India’s equities slid in April after hitting a high in the preceding month. Weak corporate earnings and uncertainty over the government's tax policy encouraged investors to take profit.

India’s tax department has started to issue back-tax notices on foreign funds, based on its belated interpretation of domicile status of the investors.

Investors too, are disappointed that the Reserve Bank of India (RBI) wasn’t more aggressive in cutting interest rates.

The decision by the RBI to adopt a wait-and-see approach by keeping interest rates on hold at 7.50% in early April failed to win approbation of the bulls.