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Modest Recovery in 2003
Financial Market Activity
Rise in Asian Dollar Market Lending . Box 12 – A Robust Financial System
Healthy Growth in Corporate Debt Market . Active Trading in Equities and Futures Market
Vibrant Treasury Market . Box 13 – The Singapore IPO Market
Mixed Performance for Insurance . Box 14 – Bank Loans to HDB Flat Buyers
Active Trading in Equities and Futures Market
Market activity in early 2003 was characterised by sluggish trading volumes and languishing stock prices, as investor confidence was weighed down by concerns over the Iraq war in early 2003 and by the subsequent outbreak of SARS in April. The local market subsequently emerged from the doldrums with the containment of SARS and the end to the war. The Singapore economy’s robust recovery from SARS and the broad improvement in the global economic climate prompted investors to shift their portfolios into equities and other cyclically sensitive assets. As at end 2003, the STI
rose to 1,764.5 points, an increase of 31.6% from the start of the year.

Turnover value on the Singapore Exchange (SGX) rose to S$162 billion in 2003, an increase of 36.4%. In volume terms, turnover grew 94.6% to 218 billion shares, with a significant portion of the increase concentrated in the second half of 2003. The joint market capitalisation of the Mainboard and SESDAQ rose 34% to S$390 billion in 2003, boosted by the rise in equity prices and in the number of listed companies. As at end 2003, a total of 413 companies were listed on the Mainboard and 138 companies were listed on SESDAQ, up from 385 and 116 in 2002.

In 2003, the number of derivative contracts traded on Singapore Exchange Derivatives Trading (SGX-DT) increased 7.1% to a record 35 million, surpassing the previous record of 33 million set in 2002. This growth was mainly attributable to trading in the Nikkei 225 stock index futures contract, which grew 46% to reach 7.1 million contracts in 2003.

There continued to be strong interest in the Eurodollar interest rate futures contract with trading accounting for 53% of total volumes on SGX-DT. Other high volume contracts include the MSCI Taiwan index futures, Euroyen interest rate futures, and the five-year Singapore government bond futures contract, which all saw growth in 2003.
Enhancing Risk-focused Supervisory Approach
Box 1 – Fostering a Sound and Progressive Financial Services Sector
Enhancing MAS’ Supervisory Capabilities
Box 2 – Stress Testing of Life Insurers
Box 3 – Streamlining Inspection Function
Thematic Inspections to Improve Surveillance