SGX share price on 3-year high!

Lifetime Membership Crisis? What crisis? SGX share price rubbished all talks of crisis as the counter hit 3-year high on 11 September 2024. The previous high of $12 for SGX share price was on 4 August 2021, which was the COVID-19 Circuit Breaker period. Due to the prevalent work-from-home, most investors had the opportunities to trade, leading to robust business performance for SGX back then.

In fact, during COVID-19 era, SGX’s daily average traded value (DAV) raced to a high of $1.4 billion. Fast forward to 2024, the DAV plunged to $1.06 billion. For most companies, such a drop would have walloped the overall business performance left, right and center. However, this is not the case for SGX. Instead, SGX share price actually fought back and is now on track to surpass the previous high seen during the COVID-19.Year-to-date, SGX share price rose 15%. The bullish form of SGX share price is in stark contrast to many of the counter’s Strait Times Index (STI) peers that have been in sluggish forms since the Fed raised interest rates aggressively in 2022. Amid the lackluster forms of many major stocks listed in SGX, there were also a dearth of listings in the Singapore bourse, prompting the authorities to launch a strategic review in a bid to restore SGX to greatness. Then again, its not as if SGX really care. Why do I say so?

Apparently, CEO Loh Boon Chye’s multi-asset strategy has paid off handsomely in recent years despite the continuing decline of its equities (cash) business. Net profit for FY2023 and FY2024 crossed $503 million and $525.9 million. The performances were certainly impressive for SGX as net profit during the pandemic era averaged about only $450 million. Furthermore, SGX recorded only 7 listings in FY2024 and 8 listings in FY2023, with trading and clearing revenue slowing to $168 million in FY2024 vis-à-vis $230 million in FY2021. However the rest of the business segments performed well to offset the declining revenues from the equities (cash) business. With such robust business performances, there is no reason for SGX share price not to be bullish.

In the annual report, Chairman Koh Boon Hwee played down the need for SGX to be overhauled but acknowledged that their “cash equities business needs more work”. He also pointed out that “the success of the stock market is dependent on multiple factors, some of which are outside the control of SGX Group”.

From the perspective of SGX shareholders, the Chairman is not exactly wrong as SGX is hardly a company in crisis. In fact, the management has consistently performed well in terms of financial result – revenue increased consistently from $1.053 billion in FY2020 to $1.232 billion in FY2024. Correspondingly, net profit also surged from $472 million to $526 million in that period. The strong results in recent years had pushed SGX share price from $8.20 in FY2020 to the current $11.60, providing solid returns for its shareholders. As such, I do not think that SGX shareholders are complaining about the management’s performance.

Notwithstanding the strong financial performance of SGX, the management recognized the importance of having a vibrant stock market, especially for a financial hub like Singapore. Hence, the need for the whole-of-government strategic review to revive the ailing equity arm of SGX. In this context, how will SGX share price continue to fare in the near future? In this article, I will share my insights on the outlook of SGX share price.Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SGX before. Whether SGX share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

SGX share price emerged from dark chapter

It took a once-a-century pandemic to jolt SGX share price from its decade of coma. Prior to the pandemic, which started in 2020, SGX share price has been languishing in the $6 to $8 bandwidth. In particular, the period from 2011 to 2019 was a tumultuous period as SGX was gripped by the [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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