It notes that SGX is well positioned to benefit from multiple structural trends that are driving demand for risk-management products.
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As a result, it expects SGX’s revenue contribution from its non-cash equities businesses to rise to 74% of total revenue in FY23 from 62% currently.
Maybank KE says this will be driven by rising demand for risk management because of increased market volatility, stricter regulations, digitisation of over-the-counter trades, expanding passive investing and reconfiguration of supply chains.
Moreover, SGX’s balance sheet has the capacity to gear up offering significant dry-powder for accretive, bolt-on acquisitions in growth segments, adds the brokerage.
See: iFAST triggers second SGX query in three months as share price surge over 8%
“Deep liquidity in its products and a strong execution track record should provide SGX with a competitive advantage [versus] rivals regionally, we believe,” Maybank KE’s head of research Thilan Wickramasinghe writes in a note dated Nov 16.
As at 12.19 pm, SGX traded flat at $9.10 with 1.7 million shares changed hands.
