Singapore Exchange Limited Delivers Record Performance, Downgraded to Neutral at S$25.00 Target August 21, 2026

Strong Cash Equities Growth Drives Record Year

Singapore Exchange Limited, one of Asia’s leading multi-asset exchanges providing trading, clearing, settlement, and depository services across equities, derivatives, and fixed income, delivered a record-breaking performance in FY26 driven primarily by exceptional cash equities growth. The exchange operator’s 2HFY26 revenue and earnings met analyst estimates, with full-year results coming in at 102% and 101% of forecasts respectively.

Key Performance Drivers

Cash equities emerged as the standout performer, contributing 59% of 2H26 revenue growth with revenues surging 40% year-on-year to S$282 million. This represented S$80 million of the S$135 million group increase, positioning cash equities revenue at nearly 1.5 times equity derivatives, up from 1.1 times previously. The strong performance was underpinned by FY26 securities daily average value (SDAV) rising 35% to S$1.8 billion, marking an 18-year high, whilst maintaining the average net clearing fee at 2.61 basis points.

Fixed income, currencies and commodities (FICC) also delivered robust growth, with revenue increasing 21% year-on-year on record FY26 currency and commodity derivatives volumes, particularly in INR/USD, USD/CNH and iron ore contracts. SGX FX average daily value expanded 33% in FY26 through client expansion into EMEA and the Americas.

Mixed Performance Across Segments

Equity derivatives trading and clearing revenue showed modest growth of 2.5% year-on-year, though the average net fee per contract declined 7% to S$1.20. Management attributed this decline to Singapore dollar strength and a higher proportion of clients benefiting from volume tier pricing, expecting this trend not to persist. Notably, equity derivatives have fallen to become the third-largest segment, overtaken by FICC.

Analyst Outlook and Valuation Concerns

Phillip Securities Research has downgraded Singapore Exchange to Neutral whilst raising the target price to S$25.00 from S$18.30 previously. The upgrade in target price reflects increased FY27 estimates by 11% due to higher FICC and equities revenue alongside lower operating expenses. However, the downgrade reflects valuation concerns, with SGX trading at 38.6 times FY26 P/E versus a five-year mean of approximately 22 times, suggesting record performance levels are already priced into current valuations.

Frequently Asked Questions

Q: What drove Singapore Exchange's record performance in FY26?

A: Cash equities were the primary driver, contributing 59% of 2H26 revenue growth with revenues rising 40% year-on-year. Additionally, FICC revenue grew 21% on record currency and commodity derivatives volumes, whilst SGX FX average daily value expanded 33% through geographic client expansion.

Q: How did cash equities perform compared to other business segments?

A: Cash equities revenue is now nearly 1.5 times equity derivatives, up from 1.1 times a year ago, making it the dominant revenue contributor. Settlement and depository revenue rose 46% year-on-year, driven by higher-yielding subsequent settlement transactions.

Q: What was the performance of equity derivatives?

A: Equity derivatives showed modest growth of 2.5% year-on-year, but the average net fee per contract fell 7% to S$1.20 due to Singapore dollar strength and higher proportion of clients on volume tiers. This segment has fallen to become the third-largest, overtaken by FICC.

Q: Why did Phillip Securities Research downgrade SGX despite strong results?

A: Despite raising the target price to S$25.00, Phillip Securities Research downgraded the stock to Neutral due to valuation concerns. SGX trades at 38.6 times FY26 P/E versus a five-year mean of approximately 22 times, suggesting record performance is already priced in as the new baseline.

Q: What are SGX's guidance and outlook for FY27?

A: Management guided FY27 expense growth of 6-8% (previously 4-6%) and capital expenditure of approximately S$100 million (previously S$90-95 million). Medium-term revenue growth guidance remains unchanged at 6-8% excluding treasury operations.

Q: How significant was the dividend payment in FY26?

A: FY26 dividend per share reached 57.0 cents, representing a 52% year-on-year increase. However, this included a one-off 12.5-cent dividend from Trading Technologies gains, with FY27 expected dividend falling to 48.5 cents once this one-off component drops out.

Q: What factors supported the strong securities daily average value (SDAV)?

A: SDAV benefited from retail participation hitting a five-year high and 21 new listings raising S$4.1 billion compared to just six listings raising S$25.7 million in FY25. The approximately 50 IPO pipeline and third EQDP tranche should support SDAV into FY27.

Singapore Exchange Limited Delivers Record Performance, Downgraded to Neutral at S$25.00 Target

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

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About the author

Glenn Thum

Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.

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