SGX plunges most in 17 years
Shares in Singapore Exchange Ltd (SGX) plunged after MSCI Inc. announced it will move licensing for derivatives products on a host of gauges to Hong Kong from Singapore.
SGX’s stock fell 12%, the most since 2003, amid concerns over the loss of revenue. MSCI has struck an accord with a Hong Kong Exchanges & Clearing Ltd. unit to sell 37 futures and options contracts based on its Asian and emerging-market measures, according to a statement issued by the index provider. It will stop licensing indexes for most derivatives products with SGX early next year after the present agreement expires, the bourse said in a separate statement.
“What we saw in HKEX was a larger customer base, particularly the access to Chinese institutional and retail investors,” Henry Fernandez, MSCI’s chief executive officer, said on a conference call on Wednesday. “We also saw the ability to have a large market for index options that HKEX has developed.”
The move deals a blow to SGX, which considers the Hong Kong bourse one of its main rivals and has been suffering from a slowdown in listings. Meanwhile, Singapore is working with the National Stock Exchange of India Ltd to get a stock-trading link operational, settling a long-running licensing dispute.
The shift comes as a boost for the Hong Kong exchange as the city’s financial-hub status faces challenges, with investors spooked by a Beijing plan to impose security legislation in the city and a resurgence of pro-democracy protests.
The MSCI agreement is “absolutely a vote of confidence,” Hong Kong stock exchange Chief Executive Officer Charles Li said in a telephone interview Wednesday. The accord, subject to regulatory approvals, follows a Hong Kong bourse announcement last year about the launch of futures contracts on the MSCI China A Index.
The latest deal “will definitely help bolster Hong Kong’s appeal as a financial hub in the medium term,” said Joel Ng, an analyst at KGI Securities (Singapore) Pte.
Meanwhile, only futures and options on the MSCI Singapore Index will be carried by Singapore Exchange from February 2021, the bourse said.