SGX    Last:14.19    -0.18

SGX

Right time for SGX and TSE to deepen links

By SIOW LI SEN, Published December 22, 2006


LAST week, the Singapore Exchange (SGX) and the Tokyo Stock Exchange (TSE) - the world's second largest stock exchange in market capitalisation after New York - announced that Topix-ETFs and other Japanese securities will soon be listed here.

In the past year, funds under management in the US grew by 41% to US$372b, while ETF assets in Europe almost doubled to US$93.4b. Asia is seen as the next boom area. 
 
The agreement between SGX and TSE was no small thing. It was unveiled at a glittering ceremony held at the posh Four Seasons Hotel and was presided by Minister for Trade and Industry Lim Hng Kiang and TSE president Taizo Nishimuro.

TSE has agreed in principle to license Topix-related indices to SGX to create derivatives and exchange-traded fund (ETF) products for trading on SGX.

Topix, the Tokyo Stock Price Index, is a capitalisation-weighted index of all companies on the Tokyo exchange's First Section. It comprises some 1,700 companies, and so is regarded as most representative of the Japanese economy. The index is supplemented by the sub-indices of the 33 industry sectors.

In addition, SGX and TSE will explore setting up a trading and clearing link for both derivatives markets, with the initial focus on Japanese government bonds and Topix products.

The alliance seems to have come at an opportune time. ETFs, an established product in developed markets, are finally gaining recognition among investors here.

They are traded like shares and track the performance of a market index, commodities or bonds. As such, they are low-cost, usually liquid and track the market well - products which sit well with both fund managers and individual investors.

There are now 13 ETFs listed on SGX, compared to six at the beginning of the year. Their monthly turnover on SGX has grown almost 40 times to US$60.1 million in October from just US$1.6 million in January. In September, the turnover was even better, at US$78.5 million.

A Merrill Lynch report last month showed ETFs booming across the world. In the past year, funds under management in the United States grew by 41 per cent to US$372 billion, while ETF assets in Europe almost doubled to US$93.4 billion.

Asia is seen as the next boom area. Funds under ETF management grew by only 29 per cent to US$13.9 billion in the region in the past year. But the number of funds rose by 15 to 44 as investors increasingly look to markets like China and South Korea.

TSE, which is in the midst of a major restructuring, has been cautious in its dealings with other stock exchanges. In the past 12 months or so, it licensed Topix ETFs to Euronext, Frankfurt's Deutsche Boerse, and Milan's Borsa Italiana.

The agreement with SGX is the first with another exchange in Asia. In addition to listing Topix ETFs here, the plan is also to have direct links with TSE for the trading of Japanese government securities and Topix futures.

One fund manager said that with the popularity of the Tokyo market, he is optimistic that the Topix ETFs will be very successful. Mr Nishimuro himself said a listing on SGX would have language, currency and timezone advantages for international investors.

So it looks like SGX is on a winner in its latest venture. But SGX's alliances with foreign exchanges don't always go swimmingly well.

The link with the Australian Stock Exchange to enable investors there and in Singapore to trade selected stocks from both bourses was closed in September due to low demand. Plans to have a tie-up with Bursa Malaysia have also been delayed.

Developments with other regional bourses are stuck in the memorandum of understanding groove.

Even Minister Lim was moved to urge SGX and TSE to work together more closely and seize the opportunity to deepen and enhance trading linkages so as to strengthen Asia's competitive edge.

Maybe it was because of a niggling scepticism that the news was shrugged off by the market. But it could also be due to traders winding down their business for the holidays. But if the plan takes off, it could be the next big thing for SGX.
 

 

SGX falling today. December blues will affect SGX alot.

 

My analysis is that SGX is going sideways. Priced fluctuating between 5.5 and 5.1, as this is the built in price for profits to be expected at the current average level of trading with this bourse. So there should not be a breakaway or dip if the volume averages around 1.2 to 1.4 billion and price of securities traded around 1 to 1.5 billion daily. I feel this is one counter which some fundamental analysis should be used on, and then with support and resistance analysis.

 

Hard to tell... if I take the time frame of the last 3 weeks, SGX still looks to be on a downtrend.

 

Is Sgx breaking out now to trend higher?

 

testing the support of 5.15. down further if it breaks the support

 

SGX looks to be on a downtrend now... be cautious

 

Anyone with take on Sgx?

 

Notice that SGX has been doing share buy back, bought over 100 lots today from the open market. Any take on this? When SGX buys at this price, does it mean that the mgmt think that the stock is undervalued?

 

It could be peaking now ... might be turning south soon. Be cautious

 

Shares of SGX , Asia's second-largest listed bourse by market value, surged to a record high of $5.35 on hopes that the extended rally in the benchmark STI would sustain strong earnings.



"If the market continues to see good volume, the SGX will benefit since their earnings depend on trading volume," said a dealer with a local stock broker.



SGX derives most of its income from clearing fees on securities trading.

 

Its on uptrend now. Watch it go... it has crossed the upper bollinger bands.

 

I use 6 and 20 days MA. It looks like SGX has started it's downtrend.

 

Starting on its downtrend today? 

 

I believe the standard is 7 and 14. Use shorter one for more responsive (but maybe inaccurate) signals.

 

Hi mwz195,

Which shoter MA and which longer MA are you using for SGX ? 

 

Hi, mwzl95 and Singaporegal,



     Thanks for your reasoning and explanation. Appreciated.

     It wasn't visible to me that SGX was on a downtrend.

 

Hi allantanhc,

The shorter MA in MA crossover is starting to croos the longer one. That gives a sell signal. And like singaporegal said, RSI is starting to turn down.

 

I agree with mwzl95. SGX may be downtrending now.

Accumulation/Distribution, RSI and Chaikin are all starting to turn southwards.

 

Hi, mwzl95, how do you come to this conclusion? Don't mind sharing your thoughts?