SGX

SGX: CIMB maintains Neutral with $7.26 TP. House note that Global markets started 2013 on a strong note, celebrating with strong trading volumes (Singapore: $1.7b/day) after the US reduced its fiscal deficit. House expect the trading environment to be mildly more conducive in 2013, as China recovers. Unfortunately, the effects of austerity and deleveraging in the West are unlikely to be over. As bickering among US lawmakers continues, there will be stop-starts to equity markets with volumes unlikely to recover sustainably. That said, SGX’s rev should be supported by derivatives trading on the back of rising China optimism. Expect a derivatives-led 2Q13 to be a near-term catalyst, though the outperformance could be short-lived. House envision a tapering off of trading vol as the same old Western-world haunts return and would prefer to buy in those bouts of weakness.