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Singapore Exchange - Maybank Kim Eng 2022-02-06: Volatility Play?

SINGAPORE EXCHANGE LIMITED (SGX:S68) | SGinvestors.io SINGAPORE EXCHANGE LIMITED (SGX:S68)

Singapore Exchange - Volatility Play?


Rising global volatility could drive inflection

  • Singapore Exchange (SGX, SGX:S68)’s 1H22 PAT missed MIBG expectations, but was in-line with Street.
  • SGX’s derivatives, FX and commodities segments are delivering growth. Rising global uncertainty from rate hikes, Chinese domestic policy, inflation as well as regional re-opening should drive upside to volumes for SGX’s risk management solutions going forward, in our view.
  • Singapore’s increased relevance as a value-oriented investment destination should drive an inflection in performance, we believe.



Underlying business delivering growth

  • SGX missed largely on weaker than expected treasury income. This typically contributes around 9% of revenues, but in 1H22, it was 3%. Lower yields were to blame and re-pricing could take 6-9 months despite higher rate expectations going forward, according to Management.
  • On the other hand, we note higher volumes in fixed income, FX, commodity derivatives as well as equity derivatives. Despite a competing product on the China A50 index futures introduced by HKEX (388 HK) in Oct, income here expanded 10% Oct-Dec, according to Management, signifying the Group’s strong risk management offering.


Volatility, re-opening positive catalysts

  • Increased uncertainty from monetary tightening, the execution of China’s common fees going forward, in our view.


Lower target price for SGX but upgrade to BUY






Thilan Wickramasinghe Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2022-02-06
SGX Stock Analyst Report HOLD MAINTAIN HOLD 12.270 SAME 12.270



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