SGX

SGX: is set to reduce board lot size to 100 shares come Monday next week. Goldman reiterates Buy (on Conviction List) with TP $9.60. The house is optimistic on the change, viewing it as catalytic for increased velocity and turnover in the cash equity market. Singapore households are under-invested in equities, particularly in blue chips which are generally higher priced, hampered by the large lot size. As such, the change should effect lower barriers to investing. On the other hand, UBS downgrades to Sell (from Neutral) with TP $7.05 (from $6.80). The house ignores the lot size change and is more concerned with SGX’s growing derivatives business, which had come mostly (>60%) from China A50 and Nikkei 225 futures. It cites two reasons to not get excited over the derivatives business growth: ( i)Close correlation of A50 volumes with mainland stock market suggests that recent explosive growth may not be sustainable, as was in early 2013. (ii) Over-reliance on A50 and Nikkei 225 futures, which may fade away