SINGAPORE (May 29): Singapore Exchange will not renew the bulk of its MSCI contracts next year onwards. With trading of these index contracts coming to an end, SGX expects to suffer a 10–15% drop in earnings. What hurts too is that these MSCI contracts will now go to Hong Kong Exchanges and Clearing, pitting the two rival bourses yet again.

Analysts reacted to the news with a barrage of downgrades and cuts to their target price for SGX. “Beyond the immediate earnings impact, we believe SGX will see more competition from HKEX going forward in the derivatives space,” says DBS analyst Lim Rui Wen, who downgraded her call from “hold” to “fully valued”, with a new price target of $7.40, down from $10.

From Wednesday morning when the news was announced to the market close on Thursday, SGX’s share price has dropped by nearly a fifth to close at $8.15.

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