10 November 2017
STI’s 29 Month High Sees Stronger Product Participation
  • The five trading sessions spanning 3 to 9 November saw the Straits Times Index (STI) gain 1.3% reaching as high as 3429.21, a level last seen on 28 May 2015. Similarly the MSCI Singapore Index (SiMSCI) has gained 1.2%, reaching a record high of 384.73 points.
  • In line with the rise in the STI, the SPDR® STI ETF and Nikko AM STI ETF have seen an increase in AUM in 2017 year-to-date. The two STI ETFs recorded a combined US$636 million as of end October, up 36% from the US$466 million recorded as of 31 Dec 2016.
  • For leveraged products, Structured Warrants on the STI and the Daily Leverage Certificates on the SiMSCI offer trading opportunities for investors looking to gain leveraged long or short exposure to the Singapore benchmarks. For both products, trading activity in the month-to-date was largely in the Long instruments.

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.

Source: Bloomberg

 

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.

 

 Counter Name

Underlying

Stock Code

Type

Leverage

SiMSCI Oct Price Move (%)

DLC Oct Price Move (%)*

SiMSCI Nov MTD Price Move (%)

DLC Nov MTD Price Move (%)*

DLC SG5xLongMSG200714

SiMSCI

CIOW

Long

5x

+5.3%

+27.7%

+1.5%

+7.2%

DLC SG5xShortMSG200714

SiMSCI

CIXW

Short

5x

+5.3%

-23.8%

+1.5%

-7.2%

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.

 

Source: SGX

 

Table below are the STI and Singapore bank warrants listed for trading and upcoming listings.

 

Name

Stock Code

Call/ Put

Expiry Date

Strike Level

Nov MTD Traded Value S$

DBS Bank

 

 

 

 

 

DBS MB ECW180410

CMDW

C

10-Apr-18

23.50

3,218,169

DBS MB ECW180115

CJXW

C

15-Jan-18

23.20

1,342,596

DBS MB EPW180402

CLZW

P

2-Apr-18

21.00

1,101,682

DBS MB ECW180226

CKSW

C

26-Feb-18

22.00

72,039

DBS MB EPW180115

CKRW

P

15-Jan-18

19.55

9,380

DBS MB ECW180412

CMTW

C

12-Apr-18

25.00

To be listed on 13 Nov 2017

DBS MB EPW180412

CMUW

P

12-Apr-18

22.50

To be listed on 13 Nov 2017

UOB

 

 

 

 

 

UOB MB ECW180410

CMCW

C

10-Apr-18

25.50

2,156,256

UOB MB ECW180115

CJZW

C

15-Jan-18

25.80

330,225

UOB MB EPW180402

CMAW

P

2-Apr-18

23.50

282,252

UOB MB EPW180115

CKAW

P

15-Jan-18

24.00

73,844

UOB MB ECW180226

CLHW

C

26-Feb-18

24.00

34,120

UOB MB EPW180226

CLIW

P

26-Feb-18

22.00

315

OCBC Bank

 

 

 

 

 

OCBC BK MB ECW180301

CJYW

C

1-Mar-18

12.20

1,073,717

OCBC BK MB EPW180301

CKBW

P

1-Mar-18

11.40

291,283

OCBC BK MB ECW180226

CKTW

C

26-Feb-18

11.00

130,978

OCBC BK MB ECW171201

CHRW

C

1-Dec-17

11.20

27,688

Straits Times Index

 

 

 

 

 

STI 3300 MB ECW171229

CKMW

C

29-Dec-17

3,300

171,575

STI 3250 MB EPW171229

CKLW

P

29-Dec-17

3,250

37,949

STI 3400 MB ECW180329

CMRW

C

29-Mar-18

3,400

To be listed on 13 Nov 2017

STI 3350 MB EPW180329

CMSW

P

29-Mar-18

3,350

To be listed on 13 Nov 2017

Source: SGX, Bloomberg (data as of 09 November 2017)

 

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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.

 

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Education and Resources

 

Trading Warrants on SGX

Trading DLCs on SGX

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§  More educational videos  (link)

§  SGX Structured Warrant investor guide (link)

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§  SGX DLC investor guide (link)

§  SGX DLC factsheet (link)

§  SGX DLC Infographic (link)

 


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