The Monetary Authority of Singapore is working with the Securities Commission Malaysia to enable stock market trading link between the two countries. This will allow investors to trade and settle shares listed in Malaysia and Singapore in a more cost effective manner. This will also cover post-trade arrangements, crossborder supervisory and enforcement arrangements.

As this is a G2G bilateral arrangement, we expect this to be a positive push to trade securities on each other’s exchanges. As an indication, the current market capitalization for the Singapore market is USD585 billion (based on information from Bloomberg) while the current market capitalization for the Malaysian market is about USD482 billion. Together, this amounted to a combined market capitalization of USD1,067 billion.

As a comparison, the Hong Kong Exchange Market Capitalization is currently at USD5,927 billion. This is a positive move to identify ways to stem the flow of trades out of both markets.

We are maintaining our HOLD rating for SGX and our fair value estimate for the stock is S$8.16.

Source: OCBC Research - 8 Feb 2018