Shares of Singapore Exchange S68 Group surged this morning after an upgrade by Morgan Stanley, citing ongoing efforts to boost the vibrancy of the local bourse.
SGX shares surged to as high as $12.20 before easing somewhat to $12.05 as at 11.32 am, up 5.52% for the day.
"Seemingly stronger political will and low market expectations mean that any new initiatives proposed in the coming nine months could be met with a broad-based uplift in valuation multiples, especially for larger cap stocks," according to a team of Morgan Stanley analysts in their Nov 17 report, where they upgrade their call from "underweight" to "overweight".
"We expect MSCI Singapore P/E to rise to above-trend levels as markets price in a more vibrant equities market. Singapore equities rank among the most preferred markets in our APxJ/EM Equity Strategy team's allocation framework," the analysts add, giving a new target price of $14.31 from just $10.01.
They believe that SGX's outperformance versus major indices such as the FTSE STI Index and global exchanges over the last four months was almost entirely driven by earnings upgrades post FY2024 ended June results.
"We see a further 7% long-term upside in our bull case. In addition, higher revenues could drive PER multiples to between 23-25x," adds Morgan Stanley.
SGX shares closed at $11.91 on Nov 18, up 4.29% for the day, bringing year-to-date gain to more than a fifth.
