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Discover two SGX-listed Leveraged & Inverse Products designed around different short-term views on the Singapore market.
In the previous article, we explored how Leveraged & Inverse Products (L&I) differ from stocks, ETFs, CFDs, Forex, Futures and Options. We also discussed how different financial products are designed for different investment objectives.
This article brings that concept closer to home.
If you follow the Singapore market, you may already have a view on where it’s headed. Some investors expect local equities to continue rising. Others anticipate a period of weakness or are looking to manage short-term downside risk.
Different market views can exist at the same time.
Phillip Nova offers two SGX-listed Leveraged & Inverse Products designed around these different short-term views on the Singapore market:
- Phillip-Nova MSCI Singapore Daily (2X) Leveraged Product (SGX: LSS)
- Phillip-Nova MSCI Singapore Daily (-1X) Inverse Product (SGX: SSS)
Both are built on the same underlying index. Both are available through your existing NOVA account. The difference lies in the market view each product is designed to express.
Understanding the Singapore Market They Track
Before looking at LSS and SSS, it’s helpful to understand what they both track. Both products are linked to the MSCI Singapore Index (SiMSCI).
The MSCI Singapore Index measures the performance of the large- and mid-cap segments of Singapore’s equity market, covering approximately 85% of the free float-adjusted market capitalisation of Singapore-listed companies.
In practical terms, it represents many of the companies that Singapore investors know well.
The index is primarily made up of three major segments:
- Banking – including DBS, OCBC and UOB, which together make up a significant portion of the index
- Real Estate – including Singapore REITs and major property developers
- Industrials and Conglomerates – including companies in logistics, telecommunications and consumer sectors
Because of this composition, movements in the index are often influenced by factors such as:
- Monetary Authority of Singapore (MAS) policy
- Interest rate expectations
- Financial sector earnings
- Regional trade activity
- Property market sentiment
Rather than tracking a single company, both LSS and SSS provide exposure to the performance of the broader Singapore equity market through this index.
One Market. Two Different Views.
The Singapore market doesn’t always move in one direction.
Some investors may believe Singapore equities are positioned to strengthen over the short term. Others may expect a temporary pullback following a strong rally or ahead of important economic events.
Neither view is inherently right or wrong. They simply represent different expectations about how the market may behave over the near term.
LSS and SSS are designed around these different short-term market views.
For investors researching a
short-term bullish view
Some investors who expect the Singapore market to strengthen over the short term research products designed to amplify the daily performance of the MSCI Singapore Index.
One such product is:
Phillip-Nova MSCI Singapore Daily (2X) Leveraged Product (SGX:LSS)
LSS seeks, before fees and expenses, to provide investment results corresponding to two times (2X) the daily performance of the MSCI Singapore Index.
- If the index rises by 1% on a given trading day, LSS targets approximately a 2% gain.
- If the index falls by 1%, LSS targets approximately a 2% decline.
- Like other Leveraged Products, this objective applies on a daily basis and is reset each trading day.
LSS uses a futures-based structure to achieve its stated daily objective and is classified in Singapore as a Specified Investment Product (SIP)*.
For investors researching a
short-term bearish view
Other investors may expect short-term weakness in the Singapore market or wish to understand products designed around declining market movements.
One such product is:
Phillip-Nova MSCI Singapore Daily (-1X) Inverse Product (SGX:SSS)
SSS seeks, before fees and expenses, to provide investment results corresponding to the inverse (-1X) of the daily performance of the MSCI Singapore Index.
- If the index falls by 1% on a given trading day, SSS targets approximately a 1% gain.
- If the index rises by 1%, SSS targets approximately a 1% decline.
- Like LSS, this objective is measured on a daily basis and resets every trading day.
SSS also employs a futures-based synthetic replication strategy and is classified as a Specified Investment Product (SIP)*.
*Customer Account Review (CAR) required to protect retail investors from trading complex instruments without adequate knowledge of potential risks.
Comparing LSS and SSS
Although both products track the same underlying index, they are designed for different short-term market views.
| LSS | SSS | |
| Designed for | Short-term bullish view | Short-term bearish view |
| Daily objective | +2X daily return | -1X daily return |
| If the index rises 1% | Targets approximately +2% | Falls approximately -1% |
| If the index falls 1% | Falls approximately -2% | Targets approximately +1% |
| Multiplier | +2X | -1X |
| Trading currency | SGD (SGX:LSS) | USD (SGX:LSU) | SGD (SGX:SSS) | USD (SGX:SSU) |
Market Scenarios Investors Commonly Research
The following examples illustrate situations in which investors may research these products. They are intended for education only and are not recommendations or investment advice.
You’ve built a long-term portfolio of Singapore bank stocks and REITs.
The market has performed well, but upcoming earnings announcements and macroeconomic uncertainty leave you less certain about the short term. You don’t wish to sell investments you’ve held for years, but you’re researching products associated with a temporary market decline.
Investors commonly research SSS in this context because it is designed to move in the opposite direction of the MSCI Singapore Index on a daily basis.
You believe Singapore equities may continue to perform well over the short term following stronger-than-expected earnings, improving regional trade conditions or supportive policy developments.
Rather than selecting individual companies, you’re researching products linked to the broader Singapore market.
Investors commonly research LSS in this context because it is designed to provide two times the daily performance of the MSCI Singapore Index.
You have a positive or negative short-term view on the Singapore market but don’t necessarily want to express that view through a single company.
Instead, you’re interested in products linked to the broader market represented by the MSCI Singapore Index.
Depending on whether your view is bullish or bearish, investors commonly research LSS or SSS as exchange-traded products designed around the daily performance of the Singapore market.
Understanding the Products Before Using Them
The same market can give rise to very different investment views. Some investors may expect Singapore equities to strengthen, while others anticipate short-term weakness or seek to better understand products commonly associated with managing downside exposure.
LSS and SSS are designed around these different short-term market views.
Understanding how they work, what they are designed to achieve, and how they differ from other financial products is more important than simply knowing their names or tickers.
Find LSS, SSS, and other L&I Products on NOVA, open an account today.
