SGX

SGX: CLSA downgraded SGX to a SELL, maintaining its TP of $7.00, citing that the current strength in China-driven derivatives are unlikely to be sustained. Looking back, the explosive growth in the derivatives segment since 2013 came on the back of the Nikkei futures contracts driven by Abenomics, followed by the China A50 contracts last year, which were buoyed by a massive uptick in sentiment after the PBOC rate cut. The house reckons that the recent share price outperformance has been overdone, with future volumes unlikely to justify valuations. As a gauge, SGX is currently valued at 24x forward earnings, compared to Asian peers' 26.2x.