SGX Stock Loses Billions on Valuation Concerns

Singapore Exchange Ltd (SGX) has seen a significant drop in market value, losing about US$4.2 billion (RM17.1 billion) since its August peak. The decline comes amid growing concerns over its high valuation, with major analysts expressing skepticism.

Citi analyst Yong Hong Tan placed SGX on a 90-day “negative catalyst watch” and lowered its price target to S$17.70 per share. JPMorgan Chase & Co downgraded the stock to “neutral,” and Macquarie lowered its recommendation to “underperform.” Citi also cut its earnings estimates, citing sluggish iron-ore trading as a potential drag on derivatives fees.

SGX’s stock has fallen 19% since its record high on August 26, making it the worst performer on Singapore’s benchmark Straits Times Index (STI) during this period. Despite the sell-off, the stock trades at nearly 26 times its projected earnings, well above its 10-year average of 22 times and the STI’s valuation multiple of around 16 times.

Yong Hong Tan highlighted that stock trading has become increasingly concentrated in the big banks, which could pose a market risk. He noted that the STI could be vulnerable to volatility in the banking sector.