SGX    Last:14.14    -0.23

SGX

MAY be uptrending now... Acc/Dist and Chaikin all uptrending.

 

Sporegal, now i get it.....thanks

 

Hi smltimer,

What I mean is this... if you draw a trend line on the bar chart starting from roughly 1 month ago, you'll see the price is on a downtrend. You draw a trendline on the Acc/Dist chart also roughly 1 month ago, you'll see that its on an uptrend. That's a divergence (which seldom occurs!). Acc/Dist actually measures buying/selling power on a counter. An uptrending Acc/Dist means that buyers are beating the sellers.

 

Sporegal, you said divergence, but isn't both the price and Acc/Dist both point up? Still learning.....care to share?

 

You mean it's a good sign because there's a divergence?

 

What do you mean by...

"divergence with its price chart and the Acc/Dist chart." ?

 

I feel that the fall 2 weeks ago interrupted SGX's uptrend and the counter became a little lost for a while. But there's now a divergence with its price chart and the Acc/Dist chart.... which is a resonably good sign. 

 

Hi singaporegal,

On what basis you say that SGX is now on an uptrend?

I came to the same conclusion as you but i use the ADX to confirm, how did you arrive at the uptrend view, please could you share you methods with me :)) please :)

goldcarps

 

SGX on strong uptrend

 

FYI, from GK-CIMB Daybreak today.

Singapore Exchange (S$6.35) - Market?s dicey; downplay Indian spice

Makes widely-anticipated BSE stake acquisition

SGX announced that it is buying a 5% stake in the Bombay Stock Exchange (BSE) for

US$42.7m. It has an obligation to invest another US$17.3m to acquire additional shares

to maintain its shareholding at 5% in the event of dilution. The total consideration is to be

paid in cash. The purchase had been widely anticipated. We understand that the

Deutsche Bourse also acquired a 5% stake on 14 Feb for US$42.4m.(BSE) for

US$42.7m. It has an obligation to invest another US$17.3m to acquire additional shares

to maintain its shareholding at 5% in the event of dilution. The total consideration is to be

paid in cash. The purchase had been widely anticipated. We understand that the

Deutsche Bourse also acquired a 5% stake on 14 Feb for US$42.4m.

Comments

Financially not a stretch. Estimated valuations are hazy due to the lack of public data.

Based on BSE?s FY3/06 earnings, we estimate that BSE has been valued at 43x CY06

P/E. The CY07 acquisition P/E would probably be in the range of 32-35x. The purchase of

this small stake is not expected to stretch SGX?s balance sheet. Even if the initial cost of

S$65m escalates to S$92m, this should still be well-covered by SGX?s cash hoard of

S$216m and its S$132m worth of hedge-fund investments. Furthermore, SGX potentially

has another S$207m coming in from the sale of two floors in SGX Center. We do not

expect the BSE purchase to jeopardise SGX?s ability to pay dividends.Estimated valuations are hazy due to the lack of public data.

Based on BSE?s FY3/06 earnings, we estimate that BSE has been valued at 43x CY06

P/E. The CY07 acquisition P/E would probably be in the range of 32-35x. The purchase of

this small stake is not expected to stretch SGX?s balance sheet. Even if the initial cost of

S$65m escalates to S$92m, this should still be well-covered by SGX?s cash hoard of

S$216m and its S$132m worth of hedge-fund investments. Furthermore, SGX potentially

has another S$207m coming in from the sale of two floors in SGX Center. We do not

expect the BSE purchase to jeopardise SGX?s ability to pay dividends.

Strategic initiative to further develop Asian Gateway. In previous conversations with

SGX, we understand that the BSE is not intended to be a financial investment. Nor does

SGX have any intention of launching an eventual takeover in the longer term. Stock

exchanges do not necessarily need to own one another in order to benefit from the flows

in mutual markets. Often, well-structured collaboration will do the trick, at much lower

costs. We see the BSE purchase as more strategically-driven than financially-driven.

Avenues for co-operation include:-

1) Dual listings and cross-border listings (this is likely to benefit SGX more)

2) Trading links (akin to ASX and Bursa) and clearing links (SGX intends to

increase its fee income by undertaking clearing facilities for peers)

3) Non-equity products i.e. derivatives and commodities (BSE a beneficiary here).In previous conversations with

SGX, we understand that the BSE is not intended to be a financial investment. Nor does

SGX have any intention of launching an eventual takeover in the longer term. Stock

exchanges do not necessarily need to own one another in order to benefit from the flows

in mutual markets. Often, well-structured collaboration will do the trick, at much lower

costs. We see the BSE purchase as more strategically-driven than financially-driven.

Avenues for co-operation include:-

1) Dual listings and cross-border listings (this is likely to benefit SGX more)

2) Trading links (akin to ASX and Bursa) and clearing links (SGX intends to

increase its fee income by undertaking clearing facilities for peers)

3) Non-equity products i.e. derivatives and commodities (BSE a beneficiary here).

No significant earnings contribution at this point. Previously, the JADE collaboration

with CBOT had clear benefits. In that we could see SGX leveraging CBOT?s commodity

expertise to develop its range of commodity products. Similarly, the cross-trading tie-up

with Bursa (if it ever comes about) has the clear potential to increase trading volumes,

given investors? mutual familiarity on both sides of the Causeway.

With the BSE tie-up, we see less obvious benefits for SGX. SGX?s cross-trade tie-up with

ASX never quite produced any success as investors were unfamiliar with the opposite

markets. This is likely to be the case if SGX and BSE ever try to set up a cross-trading

platform. As for attracting listings, the only Indian stock listed on the SGX never quite

garnered investors? attention. We see the 5% stake more as a long-tail option a laPreviously, the JADE collaboration

with CBOT had clear benefits. In that we could see SGX leveraging CBOT?s commodity

expertise to develop its range of commodity products. Similarly, the cross-trading tie-up

with Bursa (if it ever comes about) has the clear potential to increase trading volumes,

given investors? mutual familiarity on both sides of the Causeway.

With the BSE tie-up, we see less obvious benefits for SGX. SGX?s cross-trade tie-up with

ASX never quite produced any success as investors were unfamiliar with the opposite

markets. This is likely to be the case if SGX and BSE ever try to set up a cross-trading

platform. As for attracting listings, the only Indian stock listed on the SGX never quite

garnered investors? attention. We see the 5% stake more as a long-tail option a laa la

SingTel?s multi-associate strategy. In the long run, if the Indian capital markets become

developed, SGX would have a more valuable little stake. We see little necessity to amend

our earnings estimates at the moment.

Likelihood of a very strong 3Q07. The strong market volumes in Jan-Mar 07 could

produce a very strong 3Q for SGX and we are reviewing our earnings estimates because

of this. Average securities daily value traded in 2Q07 (Oct-Dec 06) was S$1.3bn, but this

had ballooned to S$2.1bn in Jan-Feb 07. We think SGX could surprise current market

estimates when it reports in April.The strong market volumes in Jan-Mar 07 could

produce a very strong 3Q for SGX and we are reviewing our earnings estimates because

of this. Average securities daily value traded in 2Q07 (Oct-Dec 06) was S$1.3bn, but this

had ballooned to S$2.1bn in Jan-Feb 07. We think SGX could surprise current market

estimates when it reports in April.

But fortunes hinge on sustained volatility. Interestingly, while March?s average

securities daily value traded rocketed further to S$2.6bn, SGX?s stock was one of theInterestingly, while March?s average

securities daily value traded rocketed further to S$2.6bn, SGX?s stock was one of the

[ 4 ]

worst hit in the recent sell-off. In our opinion, the selldown could be attributed to: 1) overvaluation;

and/or 2) expectations of a bear market bringing down forward average

securities daily value traded.

We maintain our Underperform rating, noting that the recent sell-down has only

brought valuations down to 30x CY08 P/E and less than 4% yields, not low enough for us

to be excited on the stock yet. While the BSE stake is positive news, we would be worried

if the SGX continues to take minor stakes in regional exchanges, depleting its capital to

the extent that dividends are threatened. Our target price remains S$5.11, based on

DDM., noting that the recent sell-down has only

brought valuations down to 30x CY08 P/E and less than 4% yields, not low enough for us

to be excited on the stock yet. While the BSE stake is positive news, we would be worried

if the SGX continues to take minor stakes in regional exchanges, depleting its capital to

the extent that dividends are threatened. Our target price remains S$5.11, based on

DDM.

 

Bombay Stock Exchange (BSE) said on it was selling a 5% stake to SGX for US$42.7 million, following a similar deal with Deutsche Boerse last month.



The first foreign acquisition by SGX is the latest in a series of agreements between international exchanges, which are under pressure from customers to offer global services and cut fees.



BSE hopes to expand its influence in the region with the help of the deal.



"This partnership will help us leverage the growth potential in the region. This is probably a step in the integration of regional markets," BSE Chief Executive and Managing Director Rajnikan Patel told reporters.



BSE was selling shares at 42x its March 2006 earnings, while some international exchanges can trade at 35-48x their earnings,he said.



BSE and SGX said in a joint statement they had agreed to explore collaboration in listings and product development.



Hsieh said there was no conflict of interest with Deutsche Boerse, which also hopes to launch new products with the BSE.



Hsieh was upbeat about returns on the investment in BSE. "This is a stepping (stone) fee for us. We have seen that the business of an exchange is a profitable business," he said when asked how SGX would get a return on this investment.



The BSE needs to reduce the stake held by its brokers to 49% -- by stake sales and a possible IPO -- to abide by a government directive aimed at making the exchange professionally run.

 

What is the target price after this correction?

 

I think SGX better do some thing with their system....  not working from 4 pm onward.... all data shown on screen is mix up.....

 

Hi goldcarps,

Wow... you do your charting manually?! Must take lots of patience and effort. Why not just use the free charts here.

Errr.... I don't think you can upload your image onto SJ forum. I tried before...

 

Hi, Miss Singaporegal,

I think you are RIGHT in saying there are some uncertainties in the trend, i had manually plotted the ADX, +DI and -DI for SGX using excel spreadsheet.

The ADX and +DI is heading down while the -DI is heading up.The ADX is going into the 40 zone.

At best i speculate that SGX will goes into trading range for a while. I was just wondering if all those volatilities could be CFDs and Warrants Driven Hedging activities?

Similarly Capitaland is also showing the same characteristics.

Oh BTW how do i insert the ADX plot which i had saved as GIF here??? Please could you enlighten me again :)

 

MA and MACD are bearish, while the RSI seems to be neutral. So i'm still thinking it'll go down.

 

By uncertainity, I mean that certain charts are bullish while some are bearish.

For SGX, the Acc/Dist is bullish but the Chaikin is showing some uncertainity.

 

Please could you kindly further elaborate and substantiate your finding with indicators? Thank you.

 

Not necessarily... there's some uncertainity in the trend

 

I think SGX is going to go down for awhile now. All the TA indicator point to a down trend