Singapore Exchange (SGX)

[CityFarmer]

SGX will remain as a stalwart to me, after the discussion

[Temperament]

SGX will remain as a stalwart to me, after the discussion

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

[yeh]

i will buy SGX when next correction.
6.8- 2 lot
6.6-2 lot
6.3-3 lot

[dzwm87]

However, another friend of mine just wanted to have a 4% yield for her portfolio. SGX is defensive in nature and she won't lose sleep because this will probably be the only exchange in Singapore for the next 30 yrs. Fits her portfolio perfectly.

Basically, going back to the value of the business is more important about how long to hold the stock. You will dispose the position only when the fundamentals and the assumptions have changed.

You still need a right price to purchase a monopoly. I don't know the details but a stock exchange earns on listing fees and trading volume. The former is more lumpy while the latter has a more recurring nature albeit subjected to its business cycle. To generate more fees, you need more product lines which is normal to see what SGX is doing. On a cost-benefit approach, if the marginal cost is much lesser, then new fee revenue is really just a number game as what one of the forum members posted earlier.

For SGX, they have basically harvested all the low-hanging fruits. The REITs and ETF markets are already well established and perhaps the best in the region. Short-selling has also been quite developed though they could benefit more if they cancel the "opt-in lending pool" option. Corporate bonds have potential but why it is still undeveloped could be due to the characteristic of the market here. You compare this with the Philippines Stock Exchange which has yet to commence any REIT trading while their first ETF security only started trading late last year (Of course, they are more related to regulation concerns). So, what's left for SGX is really the derivative market. Will its potential growth be significant to move the needle?

For listing fees, SGX has not perform as well recently. Big names rumored to list on SGX ended up listing elsewhere. S-chips scandal also put a dent on any China-linked listing. How much will this segment decline? Will growth from derivative be able to offset the decline for this? Net-net, will it be a positive growth for SGX?

Lastly, the business is cyclical. Purchasing SGX now simply mean you are making a call that the bull market will continue moving forward. You are likely to be near the peak than the trough. IMO, the price paid now is too expensive for a company with an uncomfortable growth prospect. The 4% dividend yield does not entice me either given a higher perceived probability for capital loss.

(not vested)

[yeh]

if sgx can not break 7 dollar.
double top may form...then maybe time to go down?

[yeh]

well, today look at sti chart. i predict we may see sti hit 3270. but will not sustainable and may go down.
sti, semb corp, sgx reach their resistance.

sti at most left 50-70 point to buffer. well, i will not buy now.
maybe good time to buy again when sti 3050

that time, i predict sgx maybe around 6.6-6.7? maybe??

[csl123]

[quote='csl123' pid='78807' dateline='1396446291']

Lastly, the business is cyclical. Purchasing SGX now simply mean you are making a call that the bull market will continue moving forward. You are likely to be near the peak than the trough. IMO, the price paid now is too expensive for a company with an uncomfortable growth prospect. The 4% dividend yield does not entice me either given a higher perceived probability for capital loss.

(not vested)

Good point. But I need to reiterate that different investment objective will ultimately drive the stocks in the individual's portfolio. You are also correct on the point about capital loss, which was mentioned in my earlier post.

[arriyana]

This is good information. Thank you. I will have to re-evaluate my assumptions.

Given that the volatility of electricity is fairly low in Singapore.....

I'm surprised by your statement. I had done some research on energy storage a few years ago using the USEP volatility as data point and I remembered to the contrary.

So I went to look at the USEP on the EMC again.

EMC Price Information

The half-hourly USEP looks sufficiently volatile to me. Gut feels tells me that it is probably more volatile than WTI or Brent Crude futures. What is your complaint about volatility?


P.S. USEP = Uniform Singapore Energy Price => Energy pricing at wholesale level (layman definition)

[CityFarmer]

SGX will remain as a stalwart to me, after the discussion

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

[arriyana]

It is true that SGX is on the high side of valuation, running at P/E ratio of 21x now even at low price. Its earnings per share are fairly consistent over the past 5 years.

However, SGX do have tremendous pricing power on their products due to the monopoly. http://www.fool.sg/2014/03/23/investing-...ocs0070001 (Nicely written here)

Comparing to its peers, ASX is ~17x and HK is ~30x. SGX seems fairly priced while not exactly cheap, it is still a good company.