SGX Hits Record High After 36.5% 2025 Rally: Can Earnings Justify the Reform Premium?

This earnings release arrives amid record-breaking momentum. The stock surged 36.53% through 2025 and has added another 6.43% year-to-date, hitting a fresh all-time high today. With the Monetary Authority of Singapore (MAS) aggressively deploying its S$5 billion Equity Market Development Programme (EQDP) and the recent announcement of a landmark Dual-Listing Bridge with Nasdaq, investors are looking for tangible evidence that these structural reforms are translating into sustainable earnings growth.

According to the latest Bloomberg consensus and analyst surveys, SGX is expected to demonstrate robust top-line and bottom-line expansion:

Operating revenue for 1H FY26 is projected at around S$705 million, implying roughly 3–4% year‑on‑year growth. Net profit is expected to grow at a high single‑ to low double‑digit pace, with consensus FY26 EPS around S$0.66 (split roughly 50/50 between the two halves).

SDAV (Securities Daily Average Value) is forecast to rise from about S$1.3 billion in FY25 to around S$1.6 billion in FY26, while the current valuation effectively prices in a more bullish 1.8–1.9 billion path over the next few years. In line with management’s guidance to raise DPS by 0.25 cents every quarter from FY26 to FY28, the market is looking for a quarterly DPS in the high 8–9 cents range in FY26 and a full‑year dividend of roughly S$0.45 per share.

Analysts at J.P. Morgan recently upgraded SGX to Overweight, citing Singapore's evolution as a global "Wealth Hub." They emphasize that the S$3.95 billion already deployed via the EQDP is an under-appreciated catalyst for multi-year value creation.

– Rating Distribution: Out of 16 covering analysts, 9 maintain "Buy/Overweight" ratings, 5 are "Hold/Neutral," and only 2 suggest "Sell."

– Price Targets: The consensus target price has been revised upward to S$17.51, with bull-case targets reaching as high as S$19.20.

UBS upgraded SGX to Neutral with a target price of S$17.80. While noting that the current valuation of 26.5x forward P/E is historically high (2SD above the mean), UBS argues that a "valuation regime shift" is underway. Market optimism regarding the homecoming of tech giants like Sea and Grab via the Nasdaq bridge is justifying these higher multiples.

The first test is whether equity and derivatives volumes can track the upgraded reform story rather than just a one‑off spike. A sustainable SDAV run‑rate closer to S$1.5–1.6 billion—versus the 1H24–2H25 step‑up from S$1.2 to S$1.5 billion—would signal that policy‑driven flows (EQDP, GIP, Next 50, board‑lot cuts) are translating into structurally higher activity rather than temporary liquidity. Management commentary on the Global Listing Board, including a tangible pipeline of tech, new‑economy and potential Nasdaq dual‑listing candidates by sector, size and indicative timing, will be a key litmus test. Investors will also watch for hard targets or qualitative milestones (number of IPOs vs FY25, expected mix of dual‑listed vs primary listings, and use of Anchor Fund 65 support) to judge whether today’s “reform premium” in SGX’s 26–27x forward PE is justified.

Beyond on‑exchange volumes, the second pillar is how well SGX monetises Singapore’s emergence as a regional wealth and treasury hub. With MAS’s Equity Market Development Programme and the stricter GIP rules funnelling more HNWI and family‑office assets into Singapore‑listed equities, investors want evidence that SGX is capturing the ancillary trading and risk‑management flows around these balances. In practical terms, that means clearer disclosure on OTC FX and FICC‑adjacent businesses—daily average volume trends, client mix, and contribution to group revenue and EBITDA—rather than a generic reference; framing this segment as a medium‑term 5%–plus EBITDA contributor with visible growth drivers would strengthen the diversification narrative.

The third pillar is whether cash returns keep pace with both earnings growth and the re‑rating in the share price. Under the FY26–FY28 framework of increasing DPS by 0.25 cents every quarter, the market is effectively expecting full‑year dividends to rise from S$0.38 in FY25 to about S$0.45 in FY26, pushing the payout ratio from roughly 62% to close to 70%. For a stock trading near record‑high valuation bands, investors will look for explicit confirmation that this path is “committed” rather than merely “aspirational,” as well as management’s appetite for incremental capital returns—whether through a formalised upper bound for the payout ratio, opportunistic buybacks funded by SGX’s sizeable net cash position, or triggers for special dividends when capex and M&A needs are limited.