OCBC Securities is one of the leading stock and futures broking firms in Singapore providing full brokerage services for equities and derivatives trading. Having been in the business for more than 20 years, it employs state-of-the-art technology to deliver speedy multi-market electronic execution of trades for investors.
As early as 2005, OCBC Securities offers a single trading platform firm-wide to enable institutional execution standards for retail investors. Since then, they have been continuously upgrading their global trading capabilities to offer a full suite of services to meet investors' evolving needs. Today, investors have the option of trading in multiple global markets as well as access to a direct custody network offered by a global custodian through OCBC Securities.
What opportunities are available to private and corporate investors?
Increasingly, investors are looking beyond the local marketplace for investment opportunities. It is therefore vital that we offer them an efficient and resilient trading platform to help them capitalise on market opportunities whenever they arise. Our focus has always been on leveraging on technology to provide our customers with end-to-end solutions for all their trading needs.
With that in mind, we first introduced direct market access (“DMA”) connectivity to foreign securities exchanges such as Bursa Malaysia and HKEx in 2007. We have since expanded the network to 13 securities exchanges including the key markets of China, Japan, the US and the UK.
Moving forward, we expect the trend towards investing in the global markets to continue. This is why we have also rolled out other key initiatives that will underpin our global trading strategy.
In 2008, we were the first Singapore brokerage to partner with Citibank N.A. to offer direct custody services across 14 equity markets to our customers. This partnership has enabled us to offer our customers greater peace of mind when they trade in these 14 foreign markets as they can tap on Citibank's experience in the custody business and established track record to enjoy greater service consistency that is of global standards.
Late last year, we introduced a multi-currency share-financing service that offers investors trading in foreign equities leveraging opportunities in currencies such as AUD, HKD and USD that their securities are denominated in. Before, share financing services were available in SGD only.
What new products and services can OCBC Securities offer to its existing clients?
As global markets continue to evolve, investors are presented with different investment opportunities across countries and markets. Since extending our direct market access network to 11 key exchanges in September 2009, we have seen our monthly trade value in these key securities exchanges rise by more than 50 percent. As a result, we feel it is timely to introduce iOCBC TradeMobile as it gives investors greater control over their investments since they can now effectively capture market opportunities on the go, as long as they have their iPhones.
iOCBC TradeMobile was first introduced in May 2010. We are the first in Singapore to offer iPhone application-based mobile trading access to 14 local and foreign securities exchanges. Investors can refer to www.iocbc.com for more details.
With the new iOCBC TradeMobile, investors interested in trading in foreign markets such as US and UK can do so with greater ease. Using their iPhones, they can now monitor the markets and execute their trades whenever these markets are in session. They are also no longer confined to their desktops or notebooks as iOCBC TradeMobile provides all the key functionalities and features that can be found on iOCBC, OCBC Securities' internet trading platform.
What issues must investors take into account when trading globally?
When trading globally, investors should work with a broker that offers an efficient and reliable trading platform that can offer fast trade execution which will enable them to capture market opportunities in a timely manner. Ideally, the broker should offer a wide range of market choices for portfolio diversifications. It should also offer investors the flexibility in adopting various trading strategy that meet their needs. More importantly, the broker should offer competitive trading and financing costs so that investors can have greater control over their investments.
What are the risks of investing outside of one's local market?
One should only venture out of his local market provided he understands the risk exposure when investing in foreign securities. Some foreign markets are much more volatile than the home market, and this can have adverse consequences for orders designated “at market”. Volatility can be particularly high in markets that continue to operate outside normal trading hours in other countries. Timely and accurate information about the foreign companies may also be not as readily available compared to companies listed in the home country. Some regulations in foreign countries can affect both investments and any bank accounts set up in that country, for e.g. restrictions on fund transfers and taxation. Other risks to note include exchange rate risk, liquidity risk and country risk. It's always pertinent that the investor asks for copies of risk disclosure statements issued by the brokerage that he plans to execute his foreign trades through. This way, he has a clearer understanding of the risks involved when trading in the particular foreign market.
How can OCBC Securities help both expanding businesses realise their growth ambitions, and investors to streamline their investments?
Both institutional and retail investors can leverage on our extensive DMA trading platform to access multiple markets and wide range of asset classes such as Gold/commodities ETFs that are currently not available on the Singapore Exchange.
The main advantages of trading through OCBC Securities DMA network is the speed and accuracy of transactions. Investors can now participate in foreign bourses by placing their orders directly to the central exchanges without the need to go through local dealers or foreign brokers. They also have multiple channels to execute their trades as our DMA network is available not only through our Trading Representatives, but also via our internet trading platform, iOCBC, and our newly launched iPhone application, iOCBC TradeMobile.
In addition, through our partnership with Citibank N.A., we are able to offer direct custody service to 14 equity markets, what this means is that our customers can be assured of timely delivery of corporate actions, dividend payments and updates of regulatory changes for their foreign shares holdings.
Finally, investors can also tap on our multi-currency share financing service and multi-currency trust accounts to better manage their investments in foreign markets.
Singapore market outlook
Reflective of the pick-up in economic activities, the advance estimates by the Ministry of Trade and Industry (MTI) indicated that the Singapore economy grew 13.1 percent YoY in 1Q10, exceeding the consensus estimate for an 11 percent gain. This led the government to raise the nation's 2010 GDP growth to 7.0-9.0 percent, barely two months from its earlier revision to 4.5-6.5 percent.
Due to the stronger economic recovery, MTI is now expecting the overall 2010 CPI inflation to fall within 2.5-3.5 percent, up from its projection of 2.0-3.0 percent previously. In addition, Singapore's central bank also tightened its monetary policy by re-centring its Singapore dollar policy band upwards and by shifting its policy to modest and gradual appreciation for the currency.
On financial performance, Singapore-listed companies had also put on a strong showing for their 1Q10 results. As at 23 April, out of the 33 companies which had released their quarterly results, only one was in the red. Collectively, these firms chalked up a combined S$1.04b in group profits, representing a sharp 35 percent rise from the corresponding quarter a year ago.
Equity markets worldwide are not able to shake off the recent volatility and the uncertainty linked to the Greek debt crisis. Despite the bailout, there is now rising fears that this is threatening to drag down other Euro zone economies, especially other heavily indebted countries such as Spain and Portugal. There are also heightened fears now of a contagion sparked risk aversion.
Apart from this, recent moves by the Chinese government to tighten measures in the property market have also dented market sentiment as transaction volumes fell and property developers' share price also dropped in tandem. This is part of the Chinese government's move to curb property speculation. In addition, the Chinese government also announced moves recently to increase the required reserve ratio (RRR). The People's Bank of China (PBC) recently raised the RRR by 50p for most banks on 10th May – this is the third 50bp move of the year. The combination of the Greece crisis and the tightening in China has an overall negative impact and led to more uncertainty in the market. This was clearly seen in the increase in the CBOE Volatility Index (VIX), which is commonly referred to as a gauge of investor fear.
Against this backdrop, share prices took a dive in early May. According to Ms Carmen Lee, Head of Research, OCBC Investment Research, until there is clarity, especially on the European front, market sentiment is likely to stay cautious. In terms of valuations, the Singapore market is not expensive. Current valuations for the Singapore STI are 14.3x for this year's earnings and 13.1x for next year's earnings with dividend yield of close to 3 percent. Stock pick strategy is critical at this level, and they advocate sticking with the blue chips at the present moment.
