SGX shares plunge 19%, wiping out $4.2 billion in value after brokers cut recommendations
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Shares of Singapore Exchange, or SGX, have continued to slide, falling about 19% from their record high on August 26, wiping out roughly $4.2 billion in market value and making it the worst performer on Singapore's Straits Times Index, or STI, over that period. Pressure mounted after Citigroup cut its price target and placed the stock on a 90-day Negative Catalyst Watch, according to an October 2 research note, while maintaining a sell rating. JPMorgan Chase downgraded the stock to Neutral last week, and Macquarie lowered its rating to Underperform in mid-September. Citi analyst Yong Hong Tan said trading in the Singapore market has become increasingly concentrated in large bank stocks, which is one of the key risks to the market. Citi also cut its earnings estimates for SGX and lowered its price target to 17.70 Singapore dollars per share, implying the stock could fall nearly 16% further from Friday's close. Despite the sharp decline, the valuation remains high, with the stock trading at almost 26 times forward 12-month earnings, above its 10-year average of about 22 times and well above the STI's roughly 16 times. In Monday trading, SGX shares fell as much as 2.1% after dropping more than 7% in the previous session.