Following the announcement by Hong Kong Exchanges and Clearing (HKEX) on the launch of a new China A-share index futures contract on August 20, analysts anticipate this will have a negative impact for Singapore Exchange (SGX).

HKEX will be launching the long-awaited MSCI China A50 Connect Index - a US dollar futures contract based on the performance of 50 key Shanghai and Shenzhen stocks - on October 18. The contract will be a direct offshore competitor for SGX’s FTSE A50 derivatives contract.

Following the announcement, PhillipCapital kept its “neutral” rating for SGX with a lower target price of $10.78, down from $11.54 previously. OCBC Investment Research also reduced its target price to $10.20 while keeping its “hold” rating.

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