SGX

SGX: On MAS and SGX intention to implement a series of measures, to strengthen securities market, CIMB’s view is that even if volume falls on the implementation of these measures, it is short-term pain for long-term gain. The house cites that end-game is a more robust market place where money chases longer-term value in growing businesses, not punts. CIMB believes the implementation of a minimum trading price for issuers and a 5% collateral for market participation will have a likely negative volume impact on retail trades, but done to weed out speculators. All in all, these measures aim to channel retail investors’ interest towards blue chips and long-term investing, rather than speculative punts. To encourage retail participation, SGX is also proposing to lower clearing fees for retail trades and raise effective clearing fees for big-ticket trades as an offset. CIMB’s sensitivity analysis these measures will not crimp SGX’s revenue if retail trading activity does not fall by more than 15%. There will be a negative impact if securities trading volumes fall by more than that. CIMB maintains an Add rating with TP $8.51.