SGX

SGX: Results was still above estimates, despite the group reporting core net profit down 10% q/q to $92m, which was underscored by the softened market momentum during the quarter. Bottom-line was helped partly to a 5% quarterly decline in operating costs. Cash turnover dropped 15% q/q; derivatives turnover also declined at a similar pace owing to the weaker turnover in Japan (though partly compensated by the active China market). Average daily turnover (ADT) for securities fell to $1.1bn month-to-date in October 2013 and velocity is now 39%, which is in the low-end of the historical range and well below the 55% five-year trailing average. This implies limited downside risk, although cash turnover would normally slow down into the year-end. Turnover of the Nikkei 225 Index future dropped over 40% q/q alongside the lower cash turnover in Japan. But this could be a temporary break – in 3Q13, total cash turnover in Japan was up 127% y/y and SGX’s Nikkei futures turnover was up ‘only’ 20% y/y. Even taking into account the lower market share, there is ample room to catch up. Latest broker ratings as follows: CIMB upgrades to O/p with $8.69 TP HSBC maintains O/w with $8.50 TP