SGX

SGX: trading statistics for Nov showed derivatives trading and clearing activities grew from a year earlier while securities trading declined, with the derivatives market clocking a record-high in open interest contracts. The securities division saw value of securities traded at $19.5b (-30%), in tandem with a 29% drop in daily average value of securities traded to $927m, while the derivatives division saw derivatives volume at 8.9m contracts (+23%), led by Open interest contracts which rose 54% to a record 4.0m contracts. OTC Clearing division saw a total $4.1b notional of new OTC financial derivatives transactions cleared, up 52%, led by OTC commodities, iron ore swaps and SICOM rubber futures.. We note that in SGX's latest 1QFY14 results came in above street estimates. Net profit reached $92.3m (+24% y/y, -1% q/q), on the back of revenue of $184.1m (+15% y/y, -11% q/q). The better bottom-line performance was partially helped by a decline in operating costs. Going forward, SGX will continue to execute its strategy amid uncertain market conditions. In the next few quarters, SGX aims to introduce products such as foreign exchange futures and new ASEAN equity index futures. Management believes the growth of its distribution capabilities is on track, having received an automated trading services license in Hong Kong At the current price, SGX trades at 21x forward P/E versus its regional peers of 22x. Overall, the street has 4 Buys, 6 Holds and 3 Sell call ratings with a mean TP of $7.78.