SGX may get short-term boost from F1 IPO debut

The upcoming public offering of Formula One may lead to some temporary ADT strength for the bourse.

According to news accounts, the motor racing business has reportedly started pre-marketing for its IPO, which is estimated to be worth up to $3 billion, since May 22.

SGX has been suffering from a weak ADT in April and May, with the April securities market ADT of S$1.15b sharply lower than the Jan-Mar12 ADT of S$1.46b.

For the first eleven trading days of May 12, ADT has also been unexciting at S$1.23b.

While the Formula One IPO is seen to provide an ADT boost to SGX, DMG Research forecasts a tough ADT environment for the bourse for 2HCY12 as its longer-term initiatives will take time before they bring in significant earnings.

SGX revealed that it is working on longer-term initiatives, such as being the first Asian exchange to launch hubs in Chicago and London to connect global investors to SGX.

The analyst cut its net profit forecast in the light of SGX’s lacklustre showing and the global economic uncertainties.

It also lowered its FY12 ADT to S$1.33b, from S$1.36b, while its FY13 ADT was adjusted to S$1.50b from S$1.60b.

Despite noting a recent uptick in the ADT recently, DMG Research cautioned that there is “increasing risk of trading volumes drying up” due to the possible exit of Greece from the Euro.