• December’s 3M-SOR up MoM, 3M-SIBOR remains flat.
• Hong Kong’s domestic loans growth increased 4.23% YoY in November. Malaysia’s domestic loans growth increased 4.3% YoY and rose 0.85% MoM in November.
• SGX’s 2H21 top five equity index futures turnover are up 3.5% YoY. SGX securities and derivatives volumes from July to November 2021 are down 4.4% and 1.6% YoY respectively. SGX will be releasing 1HDec22 results on 4 February 2022.
• Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive with upside surprise due to excess capital ratios. Improving economic conditions and rising interest rates remain tailwinds for the banking sector. SGX is another beneficiary of higher interest rates.

3M-SOR showed improvement in December, 3M-SIBOR remained flat

Interest rates were up slightly in December, 3M-SOR was up 12bps MoM to 0.37% while 3M-SIBOR remained flat MoM at 0.44%. 3M-SOR is 6bps higher than its 4Q21 average of 0.31% and has improved by 18bps YoY. 3M-SIBOR is flat against its 3Q21 average of 0.44% and has improved by 3bps YoY (Figure 1).

Hong Kong and Malaysia loans growth show improvement in November

Hong Kong’s domestic loans growth increased to 4.23% YoY but fell marginally by 0.02% MoM in November. It recorded the highest positive loans growth YoY in November since July 2021.

Malaysia’s domestic loans growth saw an increase of 4.30% YoY in November and rose 0.85% MoM in November. The increase YoY in November was the highest recorded since September 2020.

Volatility fell as Singapore enters the Stabilisation Phase

Preliminary SDAV for December fell 25% YoY to $834mn (Figure 6), as the COVID-19 situation stabilised in Singapore and community cases continue to fall. VIX averaged 20.9 in December, up slightly from 18.5 in the previous month.

The top five equity index futures turnover saw an increase of 7.9% YoY in December to 13.95mn contracts (Figure 8) mainly due to the higher trading volumes of its FTSE China A50 Index Futures and MSCI Singapore Index Futures.  Notably, the FTSE China A50 Index Futures increased 8.6% MoM to 8.2mn despite the introduction of HKEX’s MSCI China A50 Connect Index futures and the Nikkei 225 Index Futures increased 41.2% MoM to 1.4mn.

For 4Q21, the top five equity index futures turnover saw an increase of 16.2% YoY to a total of 40.3mn contracts (Figure 9). This was mainly due an increase in trading volumes of its FTSE China A50 Index Futures and MSCI Singapore Index Futures.

Source: Phillip Capital Research - 10 Jan 2022