SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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 <div class='content-caption'>Sasseur REIT - CEO</div>
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Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms. 
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.” 
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT. 
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II. 
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added. 
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere. 
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled. 
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries. 
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector. 
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT. Buoyant Prospects 
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017. 
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out. 
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.” 
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector. 
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike. 
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country. 
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise. 
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets. 
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index. 
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019. 
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales. 
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.” 
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.” 
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.” Conspicuous Consumption 
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor. 
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said. 
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data. 
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added. 
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor. 
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor. 
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out. 
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.” Lifestyle Destinations 
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.” 
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added. 
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly. 
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic. 
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio. 
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.” 
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period. 
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path. 
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.” 
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle. 
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”

 

Sasseur REIT 
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.

Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management. 
The company website is: <a href="http://www.sasseurreit.com">www.sasseurreit.com</a>. 
Click <a href="https://www.sgx.com/securities/equities/CRPU">here </a>for the company's StockFacts page. 
For the three months ended 30 June 2020 financial results, click <a href="http://ir.listedcompany.com/tracker.pl?type=6&amp;id=793096&amp;">here</a>.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    Sasseur REIT - CEO


Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms.  
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.”  
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT.  
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II.  
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added.  
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere.  
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled.  
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries.  
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector.  
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT.  Buoyant Prospects  
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017.  
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out.  
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.”  
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector.  
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike.  
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country.  
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise.  
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets.  
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index.  
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019.  
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales.  
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.”  
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.”  
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.”  Conspicuous Consumption   
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor.  
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said.  
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data.  
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added.  
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor.  
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor.  
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out.  
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.”  Lifestyle Destinations  
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.”  
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added.  
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly.  
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic.  
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio.  
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.”  
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period.  
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path.  
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.”  
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle.  
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”

 

Sasseur REIT  
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.

Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management.  
The company website is: www.sasseurreit.com.  
Click here for the company's StockFacts page.  
For the three months ended 30 June 2020 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Sasseur REIT Taps Aspirations of China’s Middle Class

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<h3 class="text-h3">Trading volume in SGX FX Futures exceeded US$137 billion in February as Covid-19 fears drive volatility in financial markets</h3>

<ul>
<li>Aggregate Volume in February at 2.44 million contracts; up 52% y-o-y</li>
	<li>Aggregate Volume in February above US$137 billion; up 60% y-o-y</li>
	<li>Month-end Open Interest at US$8.9 billion; up nearly 66% y-o-y</li>
</ul>
Covid-19 had a significant impact on global financial markets in February as the anxieties of a global pandemic drove financial markets down. The virus has continued to spread across continents, with countries like South Korea, Japan, U.S., Canada, France, Italy, Germany, Iran, Nigeria and Brazil all reporting cases.

China has some of the busiest container ports in the world and disruption to global supply chain is severe. Manufacturing in Chinese factories as well as consumption from Chinese customers has also been impacted. The reduction in trade, tourism and general supply chain disruption is likely to affect global economic growth at multiple levels. Economists are already warning that global growth rates could decline to its lowest since the financial crisis a decade ago. International businesses like Nike have highlighted revenue risks due to store closures; Tesla has also announced that it would struggle to deliver on its cars with the impact on its manufacturing units based out of China. With stock prices tanking further in the second half of the month, more companies across multiple sectors like Microsoft, HSBC, Standard Chartered have also issued revenue/profit warnings.

With no available cure yet and cases involving community transmission on a rise, fears continue to grip the financial markets. All asset classes are seeing the effects of this contagion. Equities endured a hammering in February, with key equity indices registering sharp downward moves. Dow registered its worst weekly performance in a decade, dropping over 10% in just six sessions, including its worst daily drop of over 4%, while VIX shot up; implied volatilities in currency markets were up; crude oil prices suffered while spreads widened for emerging market bonds.  

In February, Donald Trump made his first official visit to India as the U.S. President. The visit concluded with an announcement of a US$3 billion defence deal that involved India purchasing military helicopters and some other equipment. However, violent protests that erupted hours before Trump’s arrival marred the visit.

SGX FX Futures registered strong trading activity in the month with trading rising sharply in the second half of the month, in line with the financial markets meltdown. While trading volume in the first two weeks were approximately US$61 billion, the next two weeks saw trading jump to about US$76 billion.

Aggregate volume for SGX FX Futures were up 52% y-o-y at 2.44 million contracts. In US$ terms, this was above US$137 billion (up 60% y-o-y). The aggregate trading volume has continued to increase each month after a drop in October last year. Aggregate open interest at the end of February was US$8.91 billion, up nearly 66% y-o-y. 
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<h3 class="text-h3">SGX USD/CNH Futures volume in February above US$96 billion; Renminbi remains steadfast against a basket of trading partner currencies despite the ravages from Covid-19 </h3>

<ul>
<li>Trading volume for SGX USD/CNH futures above US$96 billion; up 70% y-o-y </li>
	<li>Month-end Open Interest at US$6.3 billion; up 53% y-o-y </li>
</ul>
Covid-19 was the top theme in the month with its huge impact across the Chinese economy. Bloomberg reported that Chinese banks are starting to delay recognizing bad loans, given the current situation. However, any extended period of low economic activity is bound to put China’s banking system under further pressure. S&amp;P recently came out suggesting that the non-performing loan ratios in China could triple to over 6% in such a scenario. While the upcoming economic data releases will shed proper light on the actual impact of Covid-19 virus on the Chinese economy, the early signs were the weakening of the renminbi in February that fell by about 1.7 % m-o-m.

Renminbi value had seen a sharp fall in its value in August. Its appreciation had been slow and it had remained above 7. However, Renminbi had strengthened post-Christmas and continued to stay under 7 against the greenback all through January. The market holidays at the end of January had also dampened the market activity and somewhat assisted in controlling the impact of any bad news. However, Renminbi had started to weaken prior to the holiday and February started much in the same vein as Renminbi weakened by 1.3% in the first week, a relatively small drop in value, given the severity of the issue. The daily currency fixing as determined by PBOC moved in a narrow range in the second week before breaking past 7 on 19 February, the first time since Christmas last year. Despite the slight depreciation against the US Dollar, the Renminbi strengthened against a basket of currencies in the last trading week of February (as CFETS RMB index showed).

There was an immediate impact of Renminbi movement on the trading for SGX USD/CNH Futures. Trading volume on 20 February was almost US$6.3 billion (the highest in 2020 until then) and the upswing in trading activity continued until the end of month. Participants traded in excess of US$7.6 billion on 28 February, making the day with the second highest volume ever recorded for Renminbi futures at SGX.
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 <div class='content-caption'>CNH</div>
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The average daily volume of SGX USD/CNH Futures in February rose to US$4.81 billion as trading remained robust and exceeded US$2 billion on all days in the month, extending the run of such days to 45 continuous days.

The trading volume at SGX remained above 80% of the global volume during February, as participants traded over US$96 billion (962,032 lots) in the month. This represents a strong y-o-y increase of 70% in Renminbi futures at SGX. With the emergence of Covid-19 adding to the concerns around the Chinese economy and Renminbi, the open interest has grown as market looks to manage associated risks. The open interest for SGX USD/CNH Futures grew 53% y-o-y and ended February at US$6.3 billion (62,956 contracts). This represents nearly 68% of the open interest across all exchanges with similar offerings. 

<h3 class="text-h3">SGX INR/USD futures above US$39 billion in February; civil protests continue </h3>

<ul>
<li>Trading volume for SGX INR/USD Futures above US$39 billion in February; up 41% y-o-y</li>
	<li>Rupee weakens in February despite strong FPI flows </li>
</ul>
At the start of the year, the Indian government had already been behind the fiscal deficit target for the fiscal year, raising questions on its ability to present a growth-centric budget and deal with the economic slowdown. While the government did not surprise watchers and offered little towards employment or economic revival, it did focus on reforming the tax regime. There were several proposals such as raising allocations to education and railways and change in income tax slabs or development of up to a hundred new airports in the next five years. However, the finance minister offered few details towards concrete plans to finance these schemes.

The Indian government has proposed to abolish dividend distribution tax by transferring the burden from the company to the individual investor who will now be required to pay tax at their applicable individual tax bracket – a move unlikely to find support from smaller individual investors who do not pay any tax currently on such income. There were some other interesting proposals such as listing LIC on a public bourse. As a government-owned life insurance company with a big balance sheet, LIC has often been relied upon by the government to support financial markets in times of need. An IPO therefore potentially disrupts its unofficial function by reducing government control even if it allows government to raise additional funds through divestment of its stake. Market continues to speculate on a possible sovereign bond issuance by the Indian government, as a way to attract foreign capital. The government has also offered 100% tax concessions to Sovereign Wealth Funds investing in infrastructure projects, hoping to revive investment flow.

In February, the Citizenship Amendment Act remains a key theme and continues to polarize people and views. Protest rallies, both against and in support of the Act resulted in violence in places including Delhi, where BJP just lost the elections for the local assembly despite an aggressive and at times vitriolic campaign. Destruction of public property and deaths in sectarian violence marked a grim month on the subject.
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 <img src='https://api2.sgx.com/sites/default/files/2020-03/202003_3E.PNG' alt='INR' />
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Notwithstanding the recent negative headlines, investor sentiment and flow of money from foreign portfolio investors (FPI) to India seemed to get better early in the month. By mid-February, the FPI had already invested about US$3.5 billion in 2020. Despite significant withdrawals of nearly US$2 billion in the last week of the month, net inflows to India from the FPI exceeded US$1.4 billion in February. As Covid-19 took its toll on global financial markets in the second half of the month, the meltdown in global equities also hit Indian markets hard and the local indices crashed in tandem. FPI withdrew more than US$1.2 billion in the last week from Indian equities. Rupee weakened by about 95 basis points in February (bulk of it on 28 February), despite the net inflow of funds. Several critical sectors such as automotive remain exposed to the supply chain disruption from their Chinese suppliers and the true impact of Covid-19 on Indian economy will probably show up in the results of these firms and other economic data releases.

A couple of holidays in the second half of February failed to halt momentum in the trading for SGX INR/USD Futures. Trading exceeded 1.4 million contracts in February and was up 44% y-o-y. On a notional basis, trading volume exceeded US$39.6 billion and was up 41% y-o-y. Bolstered by the US$4.2 billion traded on the last day of the month, the average daily trading exceeded US$2 billion in February and trading volume exceeded US$1 billion on all days.

<h3 class="text-h3">SGX to list New Taiwan Dollar Futures (TWD) contract</h3>

SGX will list a new, cash-settled Taiwan Dollar Futures contract for clients to manage their exposure to the currency. The notional contract size will be close to US$100,000, making it more efficient to trade and clear, enabling participants to mitigate the cost pressures that will increase as the next phase of Uncleared Margin Rules (UMR) looms.

The key specifications are as listed below:
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-03/202003_4E.PNG' alt='new TWD spec' />
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 <div class='content-caption'>new twd</div>
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 <img src='https://api2.sgx.com/sites/default/files/2020-03/202003_5E.PNG' alt='contract codes' />
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 <div class='content-caption'>FX_contracts</div>



Trading volume in SGX FX Futures exceeded US$137 billion in February as Covid-19 fears drive volatility in financial markets


Aggregate Volume in February at 2.44 million contracts; up 52% y-o-y
	Aggregate Volume in February above US$137 billion; up 60% y-o-y
	Month-end Open Interest at US$8.9 billion; up nearly 66% y-o-y

Covid-19 had a significant impact on global financial markets in February as the anxieties of a global pandemic drove financial markets down. The virus has continued to spread across continents, with countries like South Korea, Japan, U.S., Canada, France, Italy, Germany, Iran, Nigeria and Brazil all reporting cases.

China has some of the busiest container ports in the world and disruption to global supply chain is severe. Manufacturing in Chinese factories as well as consumption from Chinese customers has also been impacted. The reduction in trade, tourism and general supply chain disruption is likely to affect global economic growth at multiple levels. Economists are already warning that global growth rates could decline to its lowest since the financial crisis a decade ago. International businesses like Nike have highlighted revenue risks due to store closures; Tesla has also announced that it would struggle to deliver on its cars with the impact on its manufacturing units based out of China. With stock prices tanking further in the second half of the month, more companies across multiple sectors like Microsoft, HSBC, Standard Chartered have also issued revenue/profit warnings.

With no available cure yet and cases involving community transmission on a rise, fears continue to grip the financial markets. All asset classes are seeing the effects of this contagion. Equities endured a hammering in February, with key equity indices registering sharp downward moves. Dow registered its worst weekly performance in a decade, dropping over 10% in just six sessions, including its worst daily drop of over 4%, while VIX shot up; implied volatilities in currency markets were up; crude oil prices suffered while spreads widened for emerging market bonds.  

In February, Donald Trump made his first official visit to India as the U.S. President. The visit concluded with an announcement of a US$3 billion defence deal that involved India purchasing military helicopters and some other equipment. However, violent protests that erupted hours before Trump’s arrival marred the visit.

SGX FX Futures registered strong trading activity in the month with trading rising sharply in the second half of the month, in line with the financial markets meltdown. While trading volume in the first two weeks were approximately US$61 billion, the next two weeks saw trading jump to about US$76 billion.

Aggregate volume for SGX FX Futures were up 52% y-o-y at 2.44 million contracts. In US$ terms, this was above US$137 billion (up 60% y-o-y). The aggregate trading volume has continued to increase each month after a drop in October last year. Aggregate open interest at the end of February was US$8.91 billion, up nearly 66% y-o-y. 



      
    
    SGX_FX_Growth


SGX USD/CNH Futures volume in February above US$96 billion; Renminbi remains steadfast against a basket of trading partner currencies despite the ravages from Covid-19 


Trading volume for SGX USD/CNH futures above US$96 billion; up 70% y-o-y 
	Month-end Open Interest at US$6.3 billion; up 53% y-o-y 

Covid-19 was the top theme in the month with its huge impact across the Chinese economy. Bloomberg reported that Chinese banks are starting to delay recognizing bad loans, given the current situation. However, any extended period of low economic activity is bound to put China’s banking system under further pressure. S&amp;P recently came out suggesting that the non-performing loan ratios in China could triple to over 6% in such a scenario. While the upcoming economic data releases will shed proper light on the actual impact of Covid-19 virus on the Chinese economy, the early signs were the weakening of the renminbi in February that fell by about 1.7 % m-o-m.

Renminbi value had seen a sharp fall in its value in August. Its appreciation had been slow and it had remained above 7. However, Renminbi had strengthened post-Christmas and continued to stay under 7 against the greenback all through January. The market holidays at the end of January had also dampened the market activity and somewhat assisted in controlling the impact of any bad news. However, Renminbi had started to weaken prior to the holiday and February started much in the same vein as Renminbi weakened by 1.3% in the first week, a relatively small drop in value, given the severity of the issue. The daily currency fixing as determined by PBOC moved in a narrow range in the second week before breaking past 7 on 19 February, the first time since Christmas last year. Despite the slight depreciation against the US Dollar, the Renminbi strengthened against a basket of currencies in the last trading week of February (as CFETS RMB index showed).

There was an immediate impact of Renminbi movement on the trading for SGX USD/CNH Futures. Trading volume on 20 February was almost US$6.3 billion (the highest in 2020 until then) and the upswing in trading activity continued until the end of month. Participants traded in excess of US$7.6 billion on 28 February, making the day with the second highest volume ever recorded for Renminbi futures at SGX.



      
    
    CNH


The average daily volume of SGX USD/CNH Futures in February rose to US$4.81 billion as trading remained robust and exceeded US$2 billion on all days in the month, extending the run of such days to 45 continuous days.

The trading volume at SGX remained above 80% of the global volume during February, as participants traded over US$96 billion (962,032 lots) in the month. This represents a strong y-o-y increase of 70% in Renminbi futures at SGX. With the emergence of Covid-19 adding to the concerns around the Chinese economy and Renminbi, the open interest has grown as market looks to manage associated risks. The open interest for SGX USD/CNH Futures grew 53% y-o-y and ended February at US$6.3 billion (62,956 contracts). This represents nearly 68% of the open interest across all exchanges with similar offerings. 

SGX INR/USD futures above US$39 billion in February; civil protests continue 


Trading volume for SGX INR/USD Futures above US$39 billion in February; up 41% y-o-y
	Rupee weakens in February despite strong FPI flows 

At the start of the year, the Indian government had already been behind the fiscal deficit target for the fiscal year, raising questions on its ability to present a growth-centric budget and deal with the economic slowdown. While the government did not surprise watchers and offered little towards employment or economic revival, it did focus on reforming the tax regime. There were several proposals such as raising allocations to education and railways and change in income tax slabs or development of up to a hundred new airports in the next five years. However, the finance minister offered few details towards concrete plans to finance these schemes.

The Indian government has proposed to abolish dividend distribution tax by transferring the burden from the company to the individual investor who will now be required to pay tax at their applicable individual tax bracket – a move unlikely to find support from smaller individual investors who do not pay any tax currently on such income. There were some other interesting proposals such as listing LIC on a public bourse. As a government-owned life insurance company with a big balance sheet, LIC has often been relied upon by the government to support financial markets in times of need. An IPO therefore potentially disrupts its unofficial function by reducing government control even if it allows government to raise additional funds through divestment of its stake. Market continues to speculate on a possible sovereign bond issuance by the Indian government, as a way to attract foreign capital. The government has also offered 100% tax concessions to Sovereign Wealth Funds investing in infrastructure projects, hoping to revive investment flow.

In February, the Citizenship Amendment Act remains a key theme and continues to polarize people and views. Protest rallies, both against and in support of the Act resulted in violence in places including Delhi, where BJP just lost the elections for the local assembly despite an aggressive and at times vitriolic campaign. Destruction of public property and deaths in sectarian violence marked a grim month on the subject.



      
    
    INR


Notwithstanding the recent negative headlines, investor sentiment and flow of money from foreign portfolio investors (FPI) to India seemed to get better early in the month. By mid-February, the FPI had already invested about US$3.5 billion in 2020. Despite significant withdrawals of nearly US$2 billion in the last week of the month, net inflows to India from the FPI exceeded US$1.4 billion in February. As Covid-19 took its toll on global financial markets in the second half of the month, the meltdown in global equities also hit Indian markets hard and the local indices crashed in tandem. FPI withdrew more than US$1.2 billion in the last week from Indian equities. Rupee weakened by about 95 basis points in February (bulk of it on 28 February), despite the net inflow of funds. Several critical sectors such as automotive remain exposed to the supply chain disruption from their Chinese suppliers and the true impact of Covid-19 on Indian economy will probably show up in the results of these firms and other economic data releases.

A couple of holidays in the second half of February failed to halt momentum in the trading for SGX INR/USD Futures. Trading exceeded 1.4 million contracts in February and was up 44% y-o-y. On a notional basis, trading volume exceeded US$39.6 billion and was up 41% y-o-y. Bolstered by the US$4.2 billion traded on the last day of the month, the average daily trading exceeded US$2 billion in February and trading volume exceeded US$1 billion on all days.

SGX to list New Taiwan Dollar Futures (TWD) contract

SGX will list a new, cash-settled Taiwan Dollar Futures contract for clients to manage their exposure to the currency. The notional contract size will be close to US$100,000, making it more efficient to trade and clear, enabling participants to mitigate the cost pressures that will increase as the next phase of Uncleared Margin Rules (UMR) looms.

The key specifications are as listed below:



      
    
    new twd

      
    
    FX_contracts

Trading volume in SGX FX Futures exceeded US$137 billion in February as Covid-19 fears drive volatility in financial markets

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Trading volume in SGX FX Futures exceeded US$137 billion in February as Covid-19 fears drive volatility in financial markets

Trading volume in SGX FX Futures exceeded US$137 billion in February as Covid-19 fears drive volatility in financial markets Aggregate Volume...

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