SGX’s new derivatives cash cow ‘overhyped’: report

Revenue growth was muted despite the volume surge.

SGX’s derivatives business drove topline growth in the fourth quarter, but CIMB warned that the local bourse’s new cash cow is overhyped.

“[Revenue growth] failed to live up to the hope that had been stoked up by the dramatic pick-up seen in the China A50 contract volumes this quarter,” CIMB said in a report.

The report noted that although total derivative volume jumped 36% quarter-on-quarter, derivative revenue grew by a relatively marginal 8%.

“With all the other revenue line items fairly flat, the inability of derivative fees to inflate as expected caused the topline disappointment vs. our expectations. The derivative disappointment was compensated by outperformance in stable fee streams such as depository services and listing fees, but it was not enough,” CIMB said.