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SGX sees robust derivatives and commodity trading activity in July

Singapore Exchange (SGX) reports 20.5 million derivative contracts traded in July, with active trading in commodity and foreign exchange (FX) contracts outweighing equities.

Commodity derivatives volume surged 17% YoY to a record high of 4.3 million contracts, driven by optimism about China’s post-pandemic rebound.

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SINGAPORE – A total of 20.5 million derivative contracts were traded during in July. Notably, there was significant trading activity in commodity and foreign exchange (FX) contracts, which contributed more to the overall trading volume than equities did.

According to Singapore Exchange (SGX), commodity derivatives traded volume rose 17% y-o-y in July to 4.3 million contracts, a record high.

“Optimism of stimulus steps from the Chinese government to support the country’s post-pandemic rebound spurred trading activity, including among financial participants seeking to express their views on Asia’s biggest economy,” it said in a statement today.

Benchmark iron ore derivatives volume climbed 16% y-o-y in July, with forward freight agreement (FFA) volume increasing 23% y-o-y.

Petrochemicals volume gained 16% y-o-y, while the volume of SICOM rubber futures, the global pricing bellwether for natural rubber, rose 45% y-o-y.

The unique SGX Commodities offering enables institutional investors to risk-manage both cargo and freight on a single liquid and capital-efficient platform.

Record ADV for CNH futures

Cooling inflation in the US turned market participants’ focus to the outlook for interest rates, bolstering hedging activity in FX.

“Total futures traded volume on SGX FX climbed 32% y-o-y in July to 3.3 million contracts, the highest in four months, with increased trading activity in longer-tenor contracts.

“Gains were led by an 85% y-o-y jump in SGX USD/CNH Futures volume amid a widening yield gap between the U.S. dollar and Chinese renminbi (RMB).

“Average daily volume (ADV) of the contract, the world’s most widely traded international RMB futures, reached another record high of US$10 billion during the month.

“Aggregate open interest in the contract stood at about US$12.3 billion as global investors continued to hedge their portfolio exposures,” it said.

Unified liquidity pool for GIFT Connect

On SGX Equity Derivatives, index futures traded volume was 8% lower month-on-month (m-o-m) in July at 12.5 million contracts.

“The NSE IX-SGX GIFT Connect started full-scale operations on 3 July, with a successful first roll of a combined US$9 billion of open interest in GIFT Nifty 50 futures and options on the back of strong support by our clearing members.

“During the month, GIFT Nifty futures daily average volume (DAV) grew six times m-o-m to 69,000 lots or a notional US$3 billion, as a competitive orderbook with a tight bid-offer spread of 0.6 basis point demonstrated the strength of a unified liquidity pool.

“SGX FTSE China A50 Index Futures volume was steady m-o-m in July at 7.4 million contracts. The contract remained the world’s most liquid international futures for Chinese equities, with ADV of US$5 billion and month-end open interest of US$13 billion.

“SGX FTSE Taiwan Index Futures volume rose 1% m-o-m to 1.5 million contracts.

“SGX MSCI Singapore Index Futures volume climbed 14% m-om to 1.2 million contracts as volatility in the underlying index lifted trading activity,” it said.

Securities turnover grows

On SGX Securities, total market turnover value increased 19% y-o-y in July to S$21.5 billion, while securities daily average value (SDAV) gained 14% y-o-y to S$1 billion.

The benchmark Straits Times Index (STI) advanced 5.2% during the month to 3,373.98. For the first seven months of 2023, the STI has risen 3.8%, outperforming most regional Southeast Asian equity indices.

“Market turnover value of structured warrants and daily leverage certificates (DLC) climbed 17% y-o-y in July to S$614 million.

“Turnover of the recently issued Singapore Depository Receipts (SDR) on Thailand blue-chip companies increased 37% m-o-m.

“Turnover of exchange-traded funds (ETF) gained 16% m-o-m to S$256 million, largely contributed by the two STI-tracking ETFs.

“SGX-listed companies continued to tap the equity capital markets in July, with secondary fundraising higher m-o-m to S$1.2 billion,” it said.

On SGX Fixed Income, Asia’s leading international bond marketplace, the amount issued from 121 new bond listings was up m-o-m at S$28.3 billion in July.

Highlights included LG Chem Ltd’s US$2 billion dual-tranche exchange bonds, Nomura Holdings Inc.’s US$1.5 billion dual-tranche senior notes offering, Azul Secured Finance LLP’s US$800 million senior secured notes due 2028, as well as Nonghyup Bank’s US$600 million agriculture supportive social notes due 2028.

The full market statistics report can be found here.

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Taiwan’s FSC rejects CTBC Financial’s bid to acquire Shin Kong Financial, favoring Taishin’s merger plans

Taiwan’s Financial Supervisory Commission rejected CTBC Financial’s tender offer to acquire Shin Kong Financial, raising concerns about its plan, while Taishin Financial moves closer to a merger with Shin Kong. Both companies have scheduled shareholder meetings for 9 October.

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17 September 2024

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On 16 September 2024, Taiwan’s Financial Supervisory Commission (FSC) rejected an application from CTBC Financial Holding Co. to launch a tender offer for Shin Kong Financial Holding Co., potentially clearing the path for Taishin Financial Holding Co. to proceed with its proposed merger with Shin Kong Financial.

Jean Chiu, vice chairperson of the FSC, stated at a press conference that CTBC Financial failed to provide a comprehensive implementation plan for the acquisition. CTBC had proposed acquiring between 10% and 51% of Shin Kong Financial’s shares initially, with plans to later fully integrate the company.

However, the FSC raised concerns over CTBC’s lack of detailed provisions on how it would manage various potential outcomes, particularly if it failed to secure full control of Shin Kong.

Additionally, the FSC highlighted gaps in CTBC’s understanding of the financial health of Shin Kong’s life insurance subsidiary, as well as a lack of firm commitments regarding raising the capital size of this subsidiary.

This uncertainty, combined with the method of payment proposed by CTBC—using a mix of cash and its own stock—raised concerns that the tender offer could negatively affect shareholders due to potential fluctuations in CTBC’s stock price during the transaction process.

CTBC’s proposal, announced on 20 August, included an offer of NT$4.09 (US$0.13) per share in cash and an exchange of 0.3132 CTBC shares for each Shin Kong share, amounting to NT$14.55 (US$0.46) per share. This bid was labeled by Taishin Financial as a hostile takeover attempt, as Shin Kong Financial’s board had not approved the offer.

In response, Taishin Financial, which has been vying for Shin Kong through a merger, revised its stock swap offer on 11 September.

The new offer included 0.672 Taishin shares plus 0.175 preferred shares for each Shin Kong share, translating to NT$14.18 per share—closer to CTBC’s offer. Taishin had earlier disclosed on 22 August its original plan to offer 0.6022 shares of its stock per Shin Kong share, which amounted to NT$11.32 (US$0.36).

Chiu emphasized that tender offers based on stock payments are rare in Taiwan, with only six cases since the 2002 revision of tender offer regulations.

She referenced Fubon Financial Holding’s acquisition of Jih Sun Financial in 2023, where cash was used instead of shares, to highlight how tender offers have traditionally been handled in the local market.

Chiu concluded by stating that although Taiwan’s financial market operates on free-market principles, takeovers should avoid disrupting market order and respect corporate stability.

Taishin Financial and Shin Kong Financial are set to hold a special general meeting on 9 October to secure shareholder approval for their merger plan, which will then require the FSC’s endorsement.

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Times Bookstores to close after nearly four decades in Singapore

Times Bookstores will cease operations in Singapore after nearly four decades, with its final outlet at Cold Storage Jelita closing on 22 September 2024. The closure is seen as being attributed to high rents, low sales, and rising operational costs, reflecting challenges faced by physical bookstores in Singapore.

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16 September 2024

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Times Bookstores will end its operations in Singapore after nearly 40 years, as its last remaining outlet at Cold Storage Jelita on Holland Road is set to close on 22 September 2024.

In a farewell statement posted on Instagram on 16 September, the English book retailer, established in 1978, invited customers to visit the store one final time. “Our happily ever after has finally come,” the post read. “It is with both a heavy heart and a sense of fulfilment that we announce the closure of Times Bookstores.”

The closure of Times Bookstores has been anticipated for several years. The company, owned by regional consumer group Fraser and Neave Limited, closed its branches in Plaza Singapura and Waterway Point in February 2024.

The shutdowns triggered a discussion in Singapore’s literary community about how to better support bookstores.

Struggles Facing Book Retailers

Times Bookstores has been affected by increasing rent, low sales, and rising operational costs. The Covid-19 pandemic exacerbated its challenges, with the business quietly closing outlets at Marina Square and Paragon in 2021.

A key warning came in 2019 when the retailer closed its 8,000 sq ft Centrepoint branch, once one of Singapore’s largest bookstores.

These closures reflect a broader struggle for physical bookstores in Singapore. Rising rent, higher goods and services taxes (GST), and increasing printing costs have driven book prices up, making it difficult for traditional retailers to compete.

Popular bookstore also shut its Marine Parade outlet on 18 June 2023, citing similar reasons, while Books Kinokuniya closed its JEM branch on 9 May 2022 due to slow sales and rental costs.

Future of Singapore’s Bookstores

Following the closure of Times, few large bookstore chains remain in Singapore. Books Kinokuniya, the largest bookstore in Singapore, continues to operate its flagship store at Takashimaya Shopping Centre.

According to a spokesperson from Toshin Development Singapore, cited by the Straits Times, Kinokuniya remains a key tenant, though no specific renewal dates were disclosed. The spokesperson added that Kinokuniya continues to engage with the landlord regularly to appeal to patrons and remain in trend.

Although Times Bookstores will no longer have physical stores in Singapore, its book distribution business, which supplies books from international and local publishers to other retailers, continues to operate.

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