Towards Financial Freedom
SGX - Signs cross trading agreement with LSE
Good initiative, but cautiously optimistic on ADT enhancement. SGX has signed a Memorandum of Understanding with London Stock Exchange (LSE) to jointly develop capabilities to enable cross-trading of their largest and most actively traded stocks. Recall the Oct 2010 quoting of ADRs of Asian companies on GlobalQuote, which met with limited improvements in ADT (partially attributed to the market conditions). Given this backdrop, we view this new initiative as positive, but only mildly in the short term. We assume continued weak Singapore securities market ADT in the coming months, and maintain our SELL recommendation on SGX, with S$5.00 target price. Would prefer regional peers such as HKEx which has better long term growth potential.
With this agreement, SGX members will be able to trade FTSE100 securities on SGX's GlobalQuote Board while LSE members will be able to trade 36 securities of Singapore's leading indices on LSE's newly-created International Board.
The collaboration will occur in stages. Subject to regulatory approvals, the SGX securities will be quoted on LSE's International Board by early next quarter while the LSE securities will be quoted on SGX's GlobalQuote by 1H13.
Early Jul ADT is weakish. Whilst we are positive on SGX's continued innovation to develop new products, the benefits may only show up in the longer term. The current market conditions could lead to continued weakness in ADT. Our target price of S$5.00 is premised on FY13 ADT of S$1.5b, versus the MTD ADT of S$1.1b. The risk of market players lowering their ADT expectations is high.
Source: OSK
With this agreement, SGX members will be able to trade FTSE100 securities on SGX's GlobalQuote Board while LSE members will be able to trade 36 securities of Singapore's leading indices on LSE's newly-created International Board.
The collaboration will occur in stages. Subject to regulatory approvals, the SGX securities will be quoted on LSE's International Board by early next quarter while the LSE securities will be quoted on SGX's GlobalQuote by 1H13.
Early Jul ADT is weakish. Whilst we are positive on SGX's continued innovation to develop new products, the benefits may only show up in the longer term. The current market conditions could lead to continued weakness in ADT. Our target price of S$5.00 is premised on FY13 ADT of S$1.5b, versus the MTD ADT of S$1.1b. The risk of market players lowering their ADT expectations is high.
Source: OSK
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