SGX

SGX: Share price sets a new 3½ year high today at $8.02, edging past the key psychological resistance level at $8.00. The recent outperformance come days just after the exchanged posted record derivative volumes for Dec ’14 and the whole of 2014, despite securities volume being down. For 2014, total securities trading volume was at $266b (-25%), with average daily trading value at $1.1b (-25%). While there were 41 new company listings, up from 32 in 2013, total funds raised fell 45% to $3.9b. Derivatives volume however reached a record 120m contracts (+7.4%), with FTSE China A50 futures volume almost doubling to 41m contracts, while other notable contracts which garnered strong interests include the Indian rupee/USD FX futures and the newly-launched USD /Chinese Rmb FX futures. Sentiment on the street however appears mixed following the latest set of data, with some highlighting that apart from the strong growth in derivatives volume, the next catalyst would be the board lot size reduction on 19th Jan, which could lead to increased interest in blue chips. Others however opined that the recent share price outperformance appears to be pricing in overly ambitious volume estimates, cautioning investors from being overly excited by the phenomenon growth in the China A50 futures, drawing reference to the Nikkei futures volume of 2013 and citing how volumes can fall as quickly as it rises. SGX currently trades at 25.1x forward P/E, which is in line with its regional peers. Overall, the street has 7 Buy, 10 Hold and 3 Sell call ratings with a consensus TP of $7.60.