Singapore Exchange has experienced a significant rise in its share value, nearly 50% over the past year, driven by increased derivatives trading volumes amid global uncertainty. However, recent statistics from May 2025 reveal a deceleration in this momentum. The surge in trading was initially fuelled by volatility, particularly in foreign exchange futures, which saw a 50% year-on-year increase following US tariff announcements in April 2025. Despite this, equity derivatives and iron ore futures have seen a decline since the US election.
The slowdown in derivatives trading is noteworthy as it suggests that the volatility-driven growth may have reached its peak. Whilst foreign exchange futures remain robust due to geopolitical uncertainties, cash equity trading volumes are expected to decline by approximately 10% in fiscal 2025, influenced by China’s economic slowdown. Despite this, revenue may see a slight increase due to higher per-trade pricing.
Morningstar has adjusted its fair value estimate for Singapore Exchange, increasing it by 3% to S$14, reflecting the time value of money. The market appears to share a similar outlook, with shares trading close to this fair value. This adjustment underscores the importance of derivatives trading to Singapore Exchange’s overall performance, even as the pace of growth moderates.
In conclusion, whilst Singapore Exchange continues to benefit from strong foreign exchange futures trading, the cooling of other derivatives and cash equity trading highlights the challenges ahead. The company’s ability to adapt to these changes will be crucial in maintaining its market position.
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