Goldman downgrades SGX to neutral; target $7.68

Goldman Sachs has cut Singapore Exchange (SGXL.SI), Asia’s second-largest listed bourse operator, to neutral from buy and lowered its target price to $7.68 from $10.37.

Goldman has cut its estimates for SGX’s average daily turnover and earnings per share, citing the bourse’s muted turnover or initial public offering activities so far. 

The bank said that although weak volumes are largely reflected in SGX’s year-to-date share price underperformance, it has downgraded the stock given the uncertain global macro outlook, lack of near-term catalysts and weak volume trends.

 

While Goldman said SGX management has continued its focus on innovation through measures such as new derivative products, the net improvements to turnover or derivative volumes appear marginal.

 

Upside catalysts include a rise in turnover and clarity on capital deployment, Goldman said. At 11:01 a.m., SGX shares were down 0.3% at $7.19 and have fallen nearly 15% so far this year.(The Edge Singapore)