Performance and Growth

FINANCIAL MARKET ACTIVITY

Trading in the Equities and Futures Market
The Straits Times Index rose to 2,066 points at end 2004, generating capital gains of 17% for the year. However, trading volumes for 2004 as a whole declined. The first half of the year saw a confluence of several risk factors which resulted in weakness in both equity prices and a sharp decline in turnover volumes. These risk factors included continued weakness in US economic data, renewed concern over the Avian flu, rising oil prices, the risks of a hard landing in China, and fears of more aggressive money tightening by the Federal Reserve. The local market rallied in the latter half of 2004 as stronger corporate earnings, coupled with a more optimistic regional economic outlook, boosted market sentiment.

Turnover value on the Singapore Exchange (SGX) rose 13% to S$183 billion in 2004. In volume terms, turnover declined 18% to 178 billion shares. The joint market capitalisation of the Mainboard and SESDAQ rose 16% to S$452 billion in 2004 propelled by the rise in equity prices and the number of listed companies. As at end 2004, a total of 462 companies were listed on the Mainboard and 163 companies were listed on SESDAQ, up from 413 and 138 respectively in 2003.

In 2004, the number of derivative contracts traded on Singapore Exchange Derivatives Trading (SGX-DT) decreased by one-fifth to 28 million. This decline can be attributed to a fall in trading of the Eurodollar interest rate futures contract, which fell 56% to 8.2 million contracts in 2004.

There continued to be strong interest in the Nikkei 225 futures contract with trading accounting for 28% of total volume 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 increased activity in 2004.