Asian Exchange Watch

Volumes very weak across Asia (except India)

    Asian turnover volumes weakened in May (-8% MoM and -36% YoY), with weak trends across Asian exchanges (except India)-most negative in terms of YoY growth, but mixed across the region MoM (see Figure 1 and Figure 4).

    For listed exchanges, key turnover metrics were as follows: ASX’s value of equities traded was down 28% YoY, but up 13% on April. HKEx’s turnover was down 9% YoY and down 16% on April. SGX’s trading value was down 37% YoY. Bursa’s equity market turnover was down 31% YoY. JPX’s volumes were 50% YoY in May 2014 due to the high base same month last year.

    We have downgraded our forecasts and target price for HKEx by 5% following very weak May 2014 market statistics, now leading to a NEUTRAL rating (from Outperform). Our valuation reduced to HK$160 (from HK$165), implying 33x 12- month forward earnings (relative to 25x eight-year average) with robust volumes.