SGX

SGX: CIMB maintains U/p with $7.32 TP. The house note that as “taper fears”-induced selling petered out by June, inactivity became the new norm. SGX’s 1QFY14 securities and derivatives activity slowed. Expect a weak start to FY14 as securities turnover value slipped 15% qoq and derivatives broke the trend of six consecutive quarters of growth. The current environment is likely to constrain market activity as an Asean slowdown looms and uncertainty over the restart of Fed tapering hangs like a perpetual dark cloud. Add that SGX’s current valuation of 21.2x CY14 P/E is closer to mean while market activity levels are closer to -1 s.d. levels, implying that current valuations remain a cap on further upside, unless volumes pick up noticeably.