SGX raises forecasts after stronger-than-expected August activity

RHB maintained its Neutral rating on SGX but raised its target price to $17.80 from $15.90. 

RHB has raised its trading volume forecasts for Singapore Exchange (SGX), citing stronger-than-expected August activity.

In a note, the brokerage increased its assumptions for securities daily average value (SDAV) by 7%, 12%, and 12% for FY26 through FY28. It now models SDAV growth of 16% in FY26, 10% in FY27, and 5% in FY28.

Assumptions for derivatives daily average volume (DDAV) were also revised up by approximately 1.1% to 1.2%, with projected growth of 9% annually in FY26, followed by 10% in FY27 and FY28.

The upgrades follow a strong set of August trading data. SDAV came in at $1.60b, up 17% YoY and 9% MoM, putting first-half FY26 SDAV around 11% above RHB’s prior estimates.

Derivatives volume reached 1.33 million contracts, up 17% YoY and 3% MoM, and exceeded first-half forecasts by roughly 4%. A rally in China equities boosted interest in FTSE China A50 futures, which saw DDAV rise 66% YoY, reaching a six-month high.

Despite the trading strength, RHB maintained its Neutral rating on SGX but raised its target price to $17.80 from $15.90. This implies an 8% upside from the $16.50 last close, and includes a 4% ESG premium.

The broker noted that SGX’s valuation is nearing the upper end of historical ranges but pointed to several supporting factors: a strengthening IPO pipeline, undeployed equity derivative platform (EQDP) funds, and a benign macro backdrop, including falling SORA rates and a likely U.S. Federal Reserve rate cut.

RHB’s base case assumes 15 IPOs in FY26 and 10 per year in FY27 and FY28, following a Catalist listing in August.

The note also highlighted continued institutional interest in small- and mid-cap (SMID) stocks, with net inflows of $82m into SMIDs during the month.