SGX ’s 1H22 top five equity index futures turnover was up 13.9% y-o-y. We estimate SGX securities and derivatives volumes from 1H22 was down 3% and up 14% y-o-y respectively. Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive with upside surprise due to excess capital ratios. Stable economic conditions and rising interest rates remain tailwinds for the banking sector. SGX (SGX:S68) is another beneficiary of higher interest rates. Pressure points for the banks will be higher staff cost and nudge in general provisioning due to weaker economic assumptions.
Hong Kong Loans Growth Maintained While Malaysia's Loans Growth Stable In May
Hong Kong’s domestic loans growth was 1.78% y-o-y and 0.46% m-o-m in May. The m-o-m uptick in loans growth for May was the highest since Jan 2022 and the y-o-y loans growth was up 5bps from April’s loans growth of 1.73%. Malaysia’s domestic loans growth was 4.99% y-o-y and 0.28% m-o-m in May. The increase y-o-y in May was the highest since Mar 2019 and an increase of 1bps from April’s loans growth of 4.98%, while the increase m-o-m was a decline of 13bps from April’s loans growth of 0.41%.
Volatility Fell As Community Cases Begin To Fall
SGX's preliminary SDAV for June dipped 5% y-o-y to $1,141mil, as community COVID-19 cases began to fall gradually. The VIX averaged 28.3 in June, down from 29.3 in the previous month. The 5 equity index futures turnover saw an increase of 25.0% y-o-y in June to 16.66mil contracts, mainly due to the higher trading volumes of its Nikkei 225 Index Futures and Nifty 50 Index Futures. Notably, the FTSE China A50 Index Futures increased 9.4% m-o-m to 9.43mil and the Nikkei 225 Index Futures increased 52.4% m-o-m to 1.75mil, while the Nifty 50 Index Futures fell 7.6% m-o-m to 2.67mil. For 1H22, the top 5 equity index futures turnover saw an increase of 13.9% y-o-y to a total of 93.8mil contracts. This was mainly due to an increase in trading volumes of its Nifty 50 Index Futures and FTSE China A50 Index Futures.
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