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SINGAPORE: A recent study has shown that trading in overseas-listed futures contracts benefits both the index futures as well as its component stocks in the home exchanges.
The study, conducted by the Capital Markets Cooperative Research Centre, analysed the relationships between a few SGX-listed futures and the corresponding contracts traded on their home exchanges.
These include the SGX MSCI Taiwan Index futures, SGX Nikkei 225 Index futures and SGX CNX Nifty Index futures.
Over a five-year sample period, the study found that a 10 per cent increase in notional turnover of the SGX-listed futures contracts resulted in a corresponding increase in turnover of the home futures contracts, as well as their component stocks.
The authors of the study believe that this is mainly due to arbitrage trading and hedging by market participants.
They added that it is also possible that the additional offshore listing has increased the investors' base. - 938LIVE/vm
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