Sept trade data splits analysts on SGX results

ANALYSTS are in two minds about Singapore Exchange's (SGX) latest quarter after September numbers showed a flattish month marked by penny-dominated trading.

Securities daily average volume on SGX soared to fivebillion shares in September against 1.8 billion shares a year ago, a significant jump even considering an extra day of trading during the month this year.

But securities daily average value (SDAV) was just one per cent higher year-on-year, at $1.4 billion.

For the quarter ended September, daily average volume was 3.6 billion shares, more than double the year-ago average. Daily average turnover for the quarter, however, dipped 0.4 per cent to $1.3 billion.

On the derivatives front, average daily trading volume for futures and options rose 27 per cent year-on-year in September to 462,293 contracts. For the quarter, the daily average rose 35 per cent to 415,397 contracts.

Total open interest for futures and options was 10.2 million contracts in the latest quarter.

It remains to be seen how these numbers will translate into dollars and cents at SGX, which will report its fiscal first-quarter results for the three months ended September on Oct 17.

At OCBC, head of research Carmen Lee noted that the average value per traded share of about 37 cents during the latest quarter is close to recent lows.

"Obviously, this would mean that despite the sharp spike in trading volume, interest was largely centred on the second and third liners on the exchange," Ms Lee said.

"As such, securities revenue should come off for quarter, and hopefully this is partially mitigated by slightly better listing fees (more IPOs). Overall, this muted mood looks likely to persist into the October to December quarter."

At Phillip Securities, however, analyst Ken Ang looked at contract values and noted a shift towards smaller contract values of less than $1.5 million. While the proportion of uncapped trades was just 54 per cent a year ago, in the latest quarter ended September that proportion was 65 per cent.

"Therefore despite the lower SDAV, year-on-year securities revenue should be higher, and this is for the short term," he said. "For the long term, we are positive because we see equities as a strong asset class that will gain more interest, while acknowledging that markets might be quieter in the near term relative to the start of this year."

Mr Ang said more interest in equities will also benefit SGX's derivatives business, given the popularity of equity index futures and options. "They will be affected by the performance of equities in certain key markets, such as Japan, China, Taiwan and India," he said.

"Those derivatives will do well when these equity markets gain more interest."