, Singapore

Wobbly SGX undermined by weak securities volume

But strong derivatives business provides a crutch.

The local bourse has been hit by weak securities revenue in 2014. Total securities trading value for the past year totalled $266 billion, down 25% year-on-year.

In spite of the massive decline, Morgan Stanley stated in a report that the SGX’s strong derivatives business could offset the weakness in securities revenues.

“We expect derivatives volumes to continue to rise steadily. Although we expect the derivatives contribution to become a smaller part of total volume, the higher value the market ascribes to derivative volumes offers downside stock price protection if securities volumes don’t grow,” the report noted.

The SGX saw record derivatives volume in 2014, recording120 million contracts, up 7.4% from 2013. 

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