Can derivatives bail SGX out of an increasingly volatile Asian market?

Slower corporate activities and M&As are anticipated.

The recent market volatility was a huge factor in the local bourse’s earnings surge, but analysts are speculating that it should watch out for continuous volatility in the Asian market for the coming months.

According to analysts from OCBC, the hazy outlook on the Asian market would be compounded by slower corporate activities and M&As, which will result in a muted outlook for equities and lackluster securities trading.

However, OCBC says the derivatives revenue could single-handedly buttress SGX through the storm.

“The key driver will continue to be SGX’s derivatives business, and we are expecting a 25.5% increase in derivatives revenue in FY16,” OCBC said.

“With investments into staff and technology, SGX is guiding for operating expenses of S$425m to S$435m and technology-related capital expenditure of S$75m to S$80m in FY16,” they added.