■ We have left our forecast unchanged after reviewing May 2015 volumes,
with strong derivative trends and stable equity volumes
Key trends in May
1) Equity markets (30% of revenues): May's average daily turnover (ADT)
was down 2% YoY at S$1.2 bn, and down 9% on April 2015.
2) Derivatives markets (35%): Derivatives volumes were up 89% YoY in
May-15, down 4% MoM and 53% above 2014 average driven by a
strong China A50 contract.
3) Depository services (15%): These fees are more based on equity
volumes than value, with volumes flat YoY in May.
4) Listings (10%): There were no equity listings in the month, with bond
listings still the main source of new fund raisings.
■ Investment case
The key investment case for SGX is the longer-term growth
through both existing market growth and success in its strategy to become an
Asian regional gateway, with derivatives being the medium-term driver, in our
view. Nearer term, its fortunes are more linked to current market volumes.
Market trading volumes, IPOs and subsequent capital raisings
and success of new product launches (fx launched in derivatives).
■ We left our target price unchanged at S$10.00 and retain our
. The current share price implies 20x 12-month
forward earnings, noting strong yield support (~4%). (Read Report)
Read Related Report
Source : Credit Suisse Asia Pacific Equity Research
Labels: Finance Sector, SGX