Update | Singapore Exchange’s China-linked products’ volume soars in January
The Singapore Exchange said its China linked futures products turnover rose by six times after the launch of the stock through train scheme between Hong Kong and Shanghai last November.
“We have seen both trading volume and open interests increased several times in recent months after the launch of the stock through train scheme November 17,” said Chew Sutat, executive vice-president of SGX who was in Hong Kong for the opening of its new office in the Central business district of Hong Kong on Monday.
Chew said in January, the daily turnover and open interest in China A50 futures reached a record high of 600,000 contracts, up from 100,000 contracts before the scheme was launched.
Hong Kong Exchanges and Clearing (HKEx) chief executive Charles Li Xiaojia said the local bourse will introduce derivative products this year so investors can hedge their risks when they trade the A-shares through the stock through train scheme.
“We believe in connections among the different exchanges in the region would bring in higher turnover,” Chew said, adding they are not worried the new HKEx products would affect the SGX products.
“Competition is a good thing. The more exchanges launch the same products, it will create a bigger pool of liquidity and will encourage more investors to trade,” he said. “The financial market is not a zero sum game.”
While the stock through train scheme does not include Singapore, the need for hedging by international investors who trade the Shanghai A-shares via HKEx have increased turnover of the SGX FTSE China A50.
The SGX in July has already linked up with the HKEx’s data centre to make it easier for investors in the city to trade its derivatives products. This came after the two former rivals became partners in December 2013 when they signed a memorandum of understanding on co-operation.
At present, there were seven brokers from Hong Kong trading the SGX products via the link up. The seven include China Xin Yongan Futures and Celestial Commodities among others.
Chew said the investors from Hong Kong trade a wide range of derivative products that link to the indices in China A-shares, Taiwan, Japan, India and Indonesia.
Hong Kong ranks sixth in the world among global stock exchanges and Singapore 20th by market capitalisation.
