(Bloomberg) — Shares of Singapore Exchange Ltd. slipped on Monday, extending a slump that’s erased about $4.2 billion in market value since an August peak on rising concern over lofty valuations.
Adding to a growing chorus of skepticism, Citigroup Inc. lowered its price target on the stock and placed it on a 90-day “negative catalyst watch,” according to an Oct. 2 note. It maintained a sell rating. JPMorgan Chase & Co. downgraded its rating on SGX to neutral last week while Macquarie lowered its recommendation to underperform mid-September.
SGX’s stock has tumbled 19% since hitting a record high on Aug. 26, making it the worst performer on Singapore’s benchmark Straits Times Index in this period. It’s a sharp reversal for a stock that had ranked among the index’s top 2026 performers until then, buoyed by growing institutional interest in the local equity market, particularly its heavyweight bank shares.
Stock trading has become increasingly concentrated in the big banks, Citi analyst Yong Hong Tan wrote in the note, citing that as a key market risk. “Given the global banks’ selloff, the STI could be vulnerable to banks’ volatilities,” he wrote.
Despite the sharp selloff, SGX shares trade at almost 26 times their 12-month forward projected earnings. That’s versus a 10-year average of 22 times, and a valuation multiple of around 16 times for the STI benchmark.
Citi cut its earnings estimates for SGX, adding that sluggish iron-ore trading could also weigh on the fees the bourse earns from derivatives contracts. It lowered its price target to S$17.70 per share, which implies a potential downside of nearly 16% from Friday’s close.
SGX’s stock fell as much as 2.1% on Monday following a decline of more than 7% in the previous session.
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