Feb 2, 2011

Singapore Government Bonds To Be Traded on SGX

Sg Bond Rates: Singapore Government Bonds To Be Traded on SGX

Content of "Singapore Government Bonds To Be Traded on SGX" will show news that the Singapore government bonds will soon be traded on the local stock exchange. This move will make it easier for retail investors to participate in bond investments in Singapore.

Singapore Government Bonds To Be Traded on SGX

Source: The Business Times
Author: Siow Li Sen

BY mid-year, retail investors should be able to trade in Singapore government bonds - an eagerly awaited development for risk- averse savers.

Yesterday in Parliament, Finance Minister Tharman Shanmugaratnam said Singapore Government Securities (SGS) will begin trading on the Singapore Exchange (SGX) by the middle of this year, providing retail investors with a safe and higher-yielding alternative to bank deposits. Retail investors have since 2009 been able to take part in the SGS auctions via ATMs in minimum amounts of $1,000, but if they wanted to trade in them subsequently, they had to do so at selected bank branches.

In preparation for this year's trading launch on the stock exchange, SGX's Central Depository has been a custodian of individual investors' SGS holdings since April 1 last year.

Mr Tharman said retail investors concerned about the low savings rates can also participate in government bond auctions or buy high-quality corporate bonds that are now traded in smaller lot sizes on the exchange.

Most bank savings pay between 0.1 and 0.25 per cent. At yesterday's auction of three-month SGS, the median yield was 0.29 per cent.

The consumer price index inflation for November 2010 was 3.8 per cent year-on-year - the highest since January 2009 - with many economists expecting it to rise further this year from wage pressures, higher food and fuel prices and sharp hikes in vehicle certificate of entitlement (COE) premiums .

'Inflation should peak at 4.8 per cent in December, but may remain stubbornly high at above 4 per cent in Q1, such that there remains a real risk that full-year inflation will breach the upper end of the MAS forecast of 2-3 per cent,' said Wei Zheng Kit, Citi economist.

He said drivers include wage inflation from strong demand and policy-induced supply-side constraints, which would show up in services costs, fuel and food prices, rents and COE premiums. The likelihood of further tightening in 2011 by the Monetary Authority of Singapore (MAS) remains high in his view, Mr Wei added.

Mr Tharman said that inflation is expected to rise further in the first quarter of this year before moderating in subsequent quarters.

Last year, SGX said SGS will begin trading by the first quarter of this year as part of its programme to expand bond offerings to retail investors.

Read more at The Business Times.


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