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Bonds to the rescue for SGX

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It is the right time to invest in SGX? Share price has fallen from a high of $8.50 in January 2018 to the current $7.30 level. The volatility in the share price of SGX is not surprising given that the financial market is very sensitive to the economy condition.

Over the years, I have seen SGX become more business-friendly vis-à-vis the antagonistic approach taken by the previous CEO, Magnus Bocker. The recent new rule on the dual-class listing of shares and the resumption of midday break in the securities market are just some of the examples of SGX trying to improve its corporate image. I am also excited over its on-going consultation to reduce the settlement cycle and streamlining of quarterly reporting. These changes would go a long way in making the investment community a progressive one in the long-term.

With dividend yield of 4.1%, I do think that current valuation may represent good opportunity to buy and hold SGX stocks for the long-term. But do you know that apart from a leading regional stock bourse, SGX is also the largest exchange in Asia for the listing of international bonds?

SGX

Volatility is good for SGX

If investors look back, they would realize that SGX’s net profit for FY2008 was at $478 million, much higher than FY2018’s $363 million. Ten years ago, the Great Financial Crisis had ravaged the stock market, wiping off billions of market capitalization. And SGX share price was not spared either.

However, the business of SGX actually thrives on volatility in the stock market because the bourse operator charges clearing fees for both buying and selling of equities. Due to this factor, SGX recorded a massive net profit and benefitted much from the upheaval in the local stock market in 2008.

SGX

Source: SGX

Arguably, the best of SGX performance was the period between FY2008 and FY2009. That was a time of great volatility as the market was in turmoil due to the Great Financial Crisis. But for stock market operator like SGX, volatility is good because [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: October 2, 2018 — 3:00 am

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