SGX

SGX: CS maintains Neutral but lowers TP to $7.75 on the back of continued weak trading volumes in Jan. Valuation implies 23x forward P/E (around its eight-year average). CS believe SGX has a solid longer-term growth profile as a regional hub (especially in derivatives), with nearer term fortunes of the stock more market-volume related. The stand-out area for SGX remains derivatives, where it is starting to build critical mass in many products and has a good chance of becoming a regional trading hub for such contracts. Derivatives accounted for 30% of SGX revenues in FY13, up from 21% in FY10, which CS expect to increase over time. Unfortunately, derivatives are still not large enough to offset the weakness in equities volumes, and as such House believe equities will continue to be the main near-term driver of the stock.