SGX dampened by HKEx-Shanghai deal

Despite upgrading trading strategy.

According to OCBC Investment Research, SGX could be dampened by the mutual access
between HKEx and Shanghai. China’s Premier Li Keqiang yesterday expressed his support for mutual market access between the stock markets at Shanghai and Hong Kong. This is likely to give the Hong Kong Exchange (HKEx) a major boost.

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Meanwhile, SGX has just announced new securities market fee structure which will kick in from 1 June 2014. 

The key change is a reduction in clearing fees from 0.04% to 0.0325% of contract value. In addition, the cap of S$600 for contracts of S$1.5m and above will be removed. This will help to reduce transaction costs and also to encourage more trading activities. 

In addition, SGX is also in discussions with 8-10 market makers, including high-frequency traders, in another initiative to boost trading activity. 

3QFY14 results on 23 Apr
Singapore Exchange (SGX) is releasing its 3QFY14 report card on 23 Apr 2014. While there were several recent positive announcements including better commodity activities in Mar, we expect overall trading value in the quarter to be almost flat QoQ – in line with our expectations post the 2Q results. 

We are projecting net earnings growth of 2.5% to S$74.3m for 3QFY14, anticipating a better 4Q to generate our full year earnings projection of S$336.1m. While the latest announcement is positive, we believe that trading activity willstill be largely dictated by global market developments, and on this front, the outlook is fairly muted.