OREANDA-NEWS. China remains in the spotlight after the International Monetary Fund (IMF) announced on 13 November it had recommended its executive board to consider including the Renminbi (RMB) in its SDR basket. IMF Managing Director Christine Lagarde has given her nod of approval, saying she would chair a meeting of the executive board to consider the issue on 30 November.

A Special Drawing Right is an international reserve asset created by the IMF to supplement member countries' official reserve assets. The value of the SDR is based on a basket of four major currencies – US Dollar, Euro, Japanese Yen and the British Pound with the following weights – USD 41.9%, JPY 9.4%, GBP 11.3%, EUR 37.4%, according to IMF data.

The two key criteria for SDR inclusion are the currency’s share in global exports, and whether it is “freely usable” as defined by the IMF. Despite a surprise devaluation of the currency earlier in the year, global use of the yuan has surged since the IMF rejected SDR inclusion in its last review in 2010. As of August 2015, the yuan surpassed the yen to become the fourth most-used currency in global payments with a 2.79% share, data from the Society for Worldwide Interbank Financial Telecommunication showed. China’s efforts to liberalise its currency has also paid off, as it appears the IMF considers the Yuan’s managed float to be sufficiently free for SDR inclusion. These milestones reflect the progress of the currency’s internationalisation and mark the country's coming of age as an economic power. An estimated US$1 trillion of global reserves will migrate to Chinese assets once this goes through.

Meanwhile, China’s economy continues to moderate, with exports falling a larger-than-expected 6.9% in October and industrial production rising 5.6% from a year earlier, matching the weakest gain since the 2008 global financial crisis. The anaemic outlook lingers despite six central bank interest-rate cuts and moves to boost fiscal spending.

India is also a focus, with the iShares MSCI India Index ETF being the most active ETF in the MTD. Indian equities were  affected by investor concerns that Prime Minister Narendra Modi’s ability to push through economic stimulus measures could be hampered after his party lost state elections in Bihar earlier this month. Sentiment improved after the government took steps to open the economy – unveiling a federal asset sale this week, after announcing a decision to relax foreign investment rules in 15 industries last week.

Singapore’s 10 most active Exchange Traded Funds (ETFs) in the November 2015 month-to-date were iShares MSCI India Index ETF, SPDR® Gold Shares, SPDR® Straits Times Index ETF, db x-trackers FTSE Vietnam UCITS ETF, db x-trackers MSCI Indonesia Index UCITS ETF, db x-trackers FTSE China 50 UCITS ETF (DR), db x-trackers MSCI China Index UCITS ETF (DR), iShares J.P. Morgan USD Asia Credit Bond Index ETF, db x-trackers CSI 300 UCITS ETF and db x-trackers MSCI Thailand Index UCITS ETF (DR).

In the month thus far, these 10 most active ETFs averaged a 1.5% decline in total return, taking the one-year and three-year total returns to negative 5.3% and 5.6% respectively. The three best performers in terms of month-to-date total returns were db x-trackers CSI 300 UCITS ETF, db x-trackers MSCI Indonesia Index UCITS ETF and db x-trackers MSCI China Index UCITS ETF (DR).

The above-mentioned ETFs saw a combined turnover of S$78.6 million in the month thus far, which brought the total 12-month turnover to S$2.0 billion.

The three most active ETFs over the first 14 sessions of November were iShares MSCI India Index ETF, SPDR® Gold Shares and SPDR® Straits Times Index ETF.

The 10 most active ETFs in the November 2015 month-to-date are detailed below and sorted by MTD turnover.

Name Stock Code Price ($) MTD Turnover 2015 (S$) MTD Turnover 2014 (S$) 12M Turnover (S$)
iShares MSCI India Index ETF I98 6.66 24,714,937 19,807,260 644,489,311
SPDR® Gold Shares O87 102.95 20,652,628 37,035,763 481,745,051
SPDR® Straits Times Index ETF ES3 2.98 9,360,198 6,012,390 394,101,000
db x-trackers FTSE Vietnam UCITS ETF HD9 23.42 7,946,068 2,153,398 63,068,435
db x-trackers MSCI Indonesia Index UCITS ETF KJ7 11.44 3,922,242 4,548,580 80,371,948
db x-trackers FTSE China 50 UCITS ETF (DR) HD8 30.69 3,534,768 856,215 80,784,589
db x-trackers MSCI China Index UCITS ETF (DR) LG9 12.97 2,857,794 1,959,354 84,183,332
iShares J.P. Morgan USD Asia Credit Bond Index ETF N6M 10.33 2,392,523 1,506,337 51,298,131
db x-trackers CSI 300 UCITS ETF KT4 9.88 1,745,649 3,960,137 113,859,396
db x-trackers MSCI Thailand Index UCITS ETF (DR) LG7 17.08 1,477,454 1,352,642 37,918,643

Source: SGX (data as of 19 November 2015)

Name Stock Code Total Return MTD % Total return 12M % 3 Year Total Return Annualized % 3 Year Total Return % 30 day Volatility %
iShares MSCI India Index ETF I98 -5.5 -12.9 4.1 13.3 14.4
SPDR® Gold Shares O87 -6.3 -9.6 -14.9 -38.7 12.5
SPDR® Straits Times Index ETF ES3 -2.0 -8.4 2.6 7.5 14.4
db x-trackers FTSE Vietnam UCITS ETF HD9 -3.0 -18.4 5.7 19.1 18.0
db x-trackers MSCI Indonesia Index UCITS ETF KJ7 2.2 -20.8 -9.0 -24.1 37.5
db x-trackers FTSE China 50 UCITS ETF (DR) HD8 -1.6 0.0 3.9 12.0 18.2
db x-trackers MSCI China Index UCITS ETF (DR) LG9 -0.7 1.2 4.4 13.8 19.3
iShares J.P. Morgan USD Asia Credit Bond Index ETF N6M -1.5 1.1 3.4 10.7 4.9
db x-trackers CSI 300 UCITS ETF KT4 5.1 35.9 14.0 50.3 28.1
db x-trackers MSCI Thailand Index UCITS ETF (DR) LG7 -1.3 -20.6 -2.8 -8.2 19.3
Average   -1.5 -5.3 1.1 5.6 18.7

Source: SGX (data as of 19 November 2015)

SGX lists six ETFs with China equity exposures – db x-trackers FTSE China 50 UCITS ETF (DR), db x-trackers MSCI China Index UCITS ETF (DR), db x-trackers CSI 300 UCITS ETF, United  SSE50 China ETF, Lyxor ETF  China Enterprise (HSCEI) and Lyxor ETF Hong Kong (HSI). These six ETFs averaged month-to-date returns of 1.1%, bringing the average total return for the past one and three years to 14.3% and 26.8% respectively.

The six ETFs are detailed below, ranked according to MTD total returns.

Name Stock Code MTD Total Return % 12M Total Return % 3 Year Total Return %
United  SSE50 China ETF JK8 7.4 51.2 66.4
db x-trackers CSI 300 UCITS ETF KT4 5.1 35.9 50.3
db x-trackers MSCI China Index UCITS ETF (DR) LG9 -0.7 1.2 13.8
Lyxor ETF Hong Kong (HSI) A9B -0.7 -1.9 13.4
db x-trackers FTSE China 50 UCITS ETF (DR) HD8 -1.6 0.0 12.0
Lyxor ETF China Enterprise (HSCEI) P58 -2.9 -0.4 4.9
Average   1.1 14.3 26.8

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.