SGX

SGX: CS reduced its forecast by 3% following review of Aug statistics, with overall equities volumes remaining subdued, albeit improving from July. TP reduced to $9.00 (from $9.25), implying 22x 12-month forward earnings (around its eight-year average). CS see downside risk to its forecasts (FY14E ADT of $1.5b) should current weak volumes sustain. House believe the SGX does have a solid longer-term growth profile as a regional hub (especially in derivatives), with nearer-term fortunes of the stock more market-volume related. CS note that Jul/ Aug is often a seasonally weak month, so would not read too much into the weakness. The stand-out area for SGX remains derivatives, where CS believe it is starting to build critical mass in many products and SGX stands a good chance of becoming a regional trading hub for such contracts.