Risks ahead for SGX if average trading volume continues to be subdued

The securities daily derivatives average was down 1% month-on-month.

An analyst revealed that Singapore Exchange (SGX) will experience risks if the average trading volume is still softened.

In October, the total securities market turnover value was $23.1b, declined 5% year-on-year (YoY) and down 10% month-on-month (MoM). The securities daily average was unchanged YoY and down 1% MoM.

“Strong growth in derivatives volume, in line with our expectations. Derivatives volume across multiple asset classes reached new highs amid increased trading activity by global institutions, as hopes that central banks will slow their interest-rate hike cycles offset concerns about,” RHB said.

With the recent rebound in SGX’s share price, the stock “looks fairly priced amidst a muted earnings outlook.”

Meanwhile, RHB said the derivatives daily average value (DDAV) went up to 1.1m contracts in October.

“Total derivatives traded volume was up 21% YoY but down 1% MoM to c.22m contracts. The implied FY23F DDAV, based on the first four months of data for FY23, is in line with our estimate,” it added.

RHB said it keeps its neutral call for SGX, with a target price of $9.