Singapore Exchange (SGX) has reported strong market data for February 2025, yet the outlook for the second half of the financial year remains below expectations. Analyst Shekhar Jaiswal maintains a neutral stance on SGX with a target price of SGD13.60, reflecting a 4% upside. The securities turnover and derivatives volume for the second half of FY25 are projected to be lower than anticipated, despite a positive outlook for Singapore’s equity market and expected market volatility.
The Monetary Authority of Singapore’s (MAS) measures are expected to boost the equity market, potentially increasing the securities’ daily average traded value in FY26-27. However, the current valuation of SGX is considered stretched amidst a moderating growth outlook. Jaiswal notes, “Whilst we are positive on Singapore’s equity market outlook and expect elevated near-term market volatility to result in higher sequential derivatives volumes, the securities’ daily average traded value will remain flat HoH in 2HFY25 before rising in FY26-27.”
The report highlights the importance of MAS’s initiatives in supporting future growth, yet cautions investors about the current valuation levels. The neutral rating suggests that whilst there are positive elements in the market, investors should remain cautious due to the potential for volatility and the current stretched valuations.
Looking ahead, SGX’s performance will likely be influenced by the broader economic conditions and the effectiveness of MAS’s measures in stimulating market activity.
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