(SINGAPORE) Trading activity on the Singapore Exchange (SGX) has reached unseen levels in the last few months, as the red-hot stock market - at least until a couple of weeks ago - attracted punters in droves.

For the month of July, 89 billion shares worth $66.8 billion changed hands - that's an average of four billion shares, worth $3 billion, a day.

Compared with a month ago, the increase, both in terms of value and volume, is about 27 per cent.

Year-on-year, the value of shares transacted surged a whopping 280 per cent while in volume terms, the jump was 465 per cent.

For the first seven months of this year, a total of 378.6 billion shares worth $326.4 billion changed hands. In terms of value, what has been traded in the seven months so far this year has exceeded the amount done for the whole of 2006 by 18 per cent.

The volume of trading this year is a record, according to data from Thomson Financial Datastream. The most hectic trading period ever registered in the last 17 years was in June 1999, some 10 months after the market clawed its way back from the depths of the Asian financial crisis, which lasted for about a year.

Then, 39.4 billion shares valued at $27.8 billion were traded.

Increased trading volumes will, of course, translate into fat bottom lines for SGX as well as the broking firms.

Already, SGX has announced that its net profit from its operations amounted to $110.8 million in the three months to June 30, 2007. That's a 100 per cent jump from the same period a year ago.

Broking firms like UOB Kay Hian and Kim Eng Holdings announced solid first-quarter results in May and are expected to repeat this performance when they release their second- quarter results in the next couple of weeks.

Kim Eng's bottom line expanded 35 per cent to $38 million for the quarter ended March 31 while UOB Kay Hian's surged 89 per cent to $61.2 million.

Meanwhile, it is not certain how many retail investors have benefitted significantly from the current five-year-old bull market.

Here are some facts to put things in perspective. In June 1999, some 39.4 billion shares valued at $27.8 billion were traded. Numbers from the Central Depository (CDP, which records individuals' transactions, and keeps their shares and warrants) show that 486,048 accounts were active between April and June 1999.

Last month, 89 billion shares worth $66.8 billion changed hands. The number of active CDP accounts in the last three months only amounted to 250,466.

If these numbers are anything to go by, it would appear that many retail investors who were burnt in the dotcom bubble and the bear market of the subsequent two-and-a-half years have continued to stay out of the market. A high proportion of transactions could be accounted for by the proprietary trading of broking firms or institutions.

Interest and activity in the stock market will, of course, remain high as long as there is money to be made. But the prospect of that is now uncertain, given the market's concerns about the contagion risk from the US sub-prime mortgage meltdown.

A report from DBS suggests there is a very low risk that sub-prime woes will hit US consumption in any meaningful way, and even if they do, the worst case would be a few more quarters of growth closer to 1.5 per cent rather than the current expectation of 2.5 to 3 per cent.

'The more significant fallout from the US sub-prime situation may be the constricting effect on liquidity in the global financial markets,' said DBS Vickers Securities. 'The logic is that credit will tighten for private equity and hedge funds, hence putting the brakes on inflows into global asset markets, which have been trading at record prices.'

The markets need an excuse for a correction, and indeed the global equity markets are due for a well-deserved breather, it noted. 'And the consensus view is that this is likely to be a 'healthy' correction,' said DBS Vickers.

And the broking firm thinks that the current correction is likely to approximate the June 2006 sell-down in duration and magnitude, given the greater potential impact on global liquidity, combined with the uncertainty created by rising oil prices.

Last June, the correction dragged on for six weeks and prices declined 13 per cent from peak to trough.