Over the weekend, the National Stock Exchange of India (NSE), the Bombay Stock Exchange (BSE) and the Metropolitan Stock Exchange of India (MSEI) released a joint statement on the licensing of Indian indices and market data of securities listed and traded in India. The NSE’s Nifty licensing pact with SGX will end in six months.

The SGX Nifty 50 Index Futures accounted for about 11.5% of SGX’s derivatives volume in 2QFY18 and is the third largest in terms of volume, after the SGX FTSE China A50 Index Futures and the Japan Nikkei 225 Index Futures. We expect this news to result in a kneejerk reaction on SGX’s shares this morning and drag the price below Friday’s closing price of S$7.89.

Based on consensus, the 12-month target price is currently at S$8.48 (high of S$9.00 and low of S$7.70) versus our fair value of S$8.16, which is below market average. We expect some downgrades ahead following this news which will dampen the share price for the near term.

We are maintaining our HOLD on the stock.

Source: OCBC Research - 12 Feb 2018