SGX share price climbs 50% on derivatives trading strength

However, the pace of that growth is now beginning to moderate.

Singapore Exchange Ltd. (SGX) has seen its share price climb nearly 50% over the past year, lifted by a surge in derivatives trading driven by global market uncertainty.

However, the pace of that growth is now beginning to moderate, according to a new analyst report published by Morningstar.

Whilst activity in equity derivatives and iron ore futures has slowed following the US elections, trading volumes in foreign exchange (FX) futures remain strong. Morningstar reported FX futures volumes are up 50% year over year, boosted by increased currency hedging after the US announced new tariffs in April.

By contrast, the report noted that cash equity trading volumes are expected to fall by around 10% for fiscal 2025.

This decline is attributed to weaker investor sentiment tied to China’s economic slowdown. Despite the volume drop, revenue from cash equities may rise slightly due to higher fees per trade.

In response to these shifts, Morningstar raised its fair value estimate for SGX by 3% to $14. As of June 16, the stock was trading at $14.07, which Morningstar considers fairly valued. The exchange holds a three-star rating, signaling an expected fair risk-adjusted return.

Morningstar reaffirmed SGX’s “wide economic moat,” citing structural advantages in its derivatives business. The company’s fully integrated trading, clearing, and settlement infrastructure further underpins this strength.

Longer-term growth prospects remain intact, driven by macroeconomic forces such as rising debt levels and deglobalisation. These trends are expected to sustain demand for risk management tools like futures and options, areas where SGX has deep market penetration.

In terms of financials, SGX is forecast to post $1.36b in revenue and $0.56 in adjusted earnings per share for 2025. Margins are strong, with the adjusted EBITDA margin expected to reach 60.2% this year. Dividends per share are projected at $0.37 in 2025, with continued annual increases anticipated.

On the environmental, social, and governance (ESG) front, SGX received a "low risk" rating of 19.3 from Sustainalytics, as cited in Morningstar’s report.

Whilst the company has average management of ESG risks, it faces no major controversies and scores similarly to peers like ASX and Intercontinental Exchange.