18 July 2014 Asia Pacific Equity Research Diversified Financials
Asian Exchange Watch Research Analysts MONTHLY
Regional / China, HK & SEA Arjan van Veen 852 2101 7508 [email protected] Volumes recovering in June Contribution by Asian turnover volumes strengthened in June (+11% MoM and flat YoY), with Craig Cao stronger trend mainly coming from China, Taiwan, Thailand, Japan and Australia Australia MoM — and mixed across the region YoY (see Figure 1 and Figure 4). Andrew Adams 61 2 8205 4106 For listed exchanges, the key turnover metrics were as follows: ASX’s value of [email protected] equities traded was down 6% YoY, but up 3% in May. HKEx’s turnover was James Cordukes, CFA down 18% YoY and down 9% in May. SGX’s trading value was down 35% YoY 61 2 8205 4858 and down 12% MoM. Bursa’s equity market turnover was down 21% YoY. [email protected] JPX’s volumes were down 15% YoY in June 2014. Japan Takehito Yamanaka We have downgraded our 2014/15/16E earnings of Bursa Malaysia by 81 3 4550 9150 [email protected] 3%/0%1% following 2Q14 NPAT of RM46.9 mn, down 15% YoY and 7% behind Ryota Muranaka our estimate (CS: 5% above consensus for 2014). So we expect this result to be 81-34550-9259 in line with consensus. In addition to the RM0.16 interim dividend, Bursa also [email protected] declared a special dividend of RM0.20 per share. Click here for the report New Zealand Greg Main First NZ Capital 64 4 474 4061 Figure 1: June 2014 – equity trading volumes and velocity [email protected] Mtk Cap Value (US$ %chg) Volume (%chg) Velocity (% p.a.)
Region US$bn MoM YoY YTD MoM YoY YTD Jun-14 Jun-13 North Asia 9,474 47% 10% 8% 3% 10% 7% -2% 99% 91% South East Asia 1,566 8% 6% -26% -35% 21% -12% -25% 44% 60% South Asia 2,972 15% -6% 105% 23% -1% 60% 21% 34% 16% Japan 4,625 23% 18% -15% -20% 11% -6% -4% 121% 142% Pacific 1,515 8% 3% -6% -19% -1% -21% -11% 54% 58% 20,152 11% 0% -8% 6% 19% 3% 87% 87% North America 7% -6% 9% -6% 3% 18% 677% 722% Europe -1% -3% 12% -9% -13% 4% 56% 58%
Listed Exchanges HKEx (388.HK) 3,286 31% -9% -18% 5% -8% -16% 21% 34% 49% SGX (SGX SP) 610 6% -12% -35% -33% 3% -30% -25% 32% 55% Bursa (BMYS.KL) 539 5% -12% -21% 0% 4% -13% 14% 26% 36% JPX (8697) 4,625 44% 18% -15% -20% 11% -6% -4% 121% 108% ASX (ASX.AX) 1,515 14% 3% -6% -19% -1% -21% -14% 54% 68%
Source: World Federation of Exchanges (WFE), NZX, see Figure 4 for full details
Figure 2: Key news articles Region News article China Securities regulator releases new rules for market exit SG / HK SGX launches liquidity hub in Hong Kong Japan Exchange Group and Bank of China sign a memorandum of Japan understanding Source: Compiled by Credit Suisse
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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18 July 2014
Asian exchanges’ regional map
Figure 3: Asian exchanges—regional map and market capitalisation (US$)
Source: World Federation of Exchanges (WFE), NZX, Credit Suisse estimates
Asian Exchange Watch 2 18 July 2014
Asian exchanges: Key trends (June 2014)
Figure 4: June 2014 equity trading volumes and velocity Market capitalisation, change in trading value (US$ %), volume (%) and velocity (annualised value traded / market cap–% p.a.)
Mkt cap* (US$bn) Value (US$ %chg) Volume (%chg) Velocity (%p.a.) Jun-14 MoM YoY YTD MoM YoY YTD Jun-14 May-14 Jun-13 Asia Pacific North Asia 9,474 10% 8% 3% 10% 7% -2% 99% 90% 91% China Shanghai CNY 2,380 10% -1% -13% 9% -1% -12% 108% 98% 114% Shenzhen CNY 1,526 24% 26% 19% 18% 20% 11% 242% 204% 247% Hong Kong HKEx HKD 3,286 -9% -18% 5% -8% -16% 12% 34% 38% 49% KRX KRX KRW 1,316 -5% 0% -8% 7% 3% -10% 87% 93% 133% Taiwan TSEC TWD 965 7% 35% 20% 6% 26% 20% 82% 80% 73% South East Asia 1,566 6% -26% -35% 21% -12% -25% 44% 42% 60% Indonesia BEI IDR -23% 35% 23% 32% Malaysia Bursa MYR 539 -12% -21% 0% 4% -13% 23% 26% 30% 36% Phillippines PSE PHP -26% -8% 22% 8% 121% 108% 163% Singapore SGX SGD 610 -12% -35% -33% 3% -30% -25% 32% 38% 55% Thailand SET THB 417 31% -22% -47% 35% -5% -38% 85% 69% 111% South Asia 2,972 -6% 105% 23% -1% 60% 21% 34% 36% 16% India NSE INR 1,472 -5% 101% 21% -1% 60% 18% 57% 63% 40% Bombay INR 1,500 -11% 129% 31% -1% 60% 35% 11% 13% 7% Japan 4,625 18% -15% -20% 11% -6% -4% 121% 102% 142% Japan Tokyo JPY 4,625 18% -15% -20% 11% -6% -4% 121% 108% 163% Pacific 1,515 3% -6% -19% -1% -21% -11% 54% 53% 58% Australia ASX AUD 1,515 3% -6% -19% -1% -21% -11% 54% 52% 68% New Zealand NZX NZD 0%
Total 20,152 11% 0% -8% 6% 19% 3% 87% 78% 87% Average 11% 0% -8% 6% 19% 3% 77% 69% 82%
North America US Nasdaq USD 34% 54% 166% 199% NYSE USD 6% -7% 11% -8% 3% 21% 72% 100% Canada TSX CAD 2,346 13% 0% -9% 5% 4% 4% 58% 54% 71% 2,346 7% -6% 9% -6% 3% 18% Europe Germany Deutsche EUR 2,047 -2% -1% 13% -12% -15% 5% 66% 66% 86% UK LSE GBP 55% Switzerland SIX CHF 1,618 1% -5% 10% 3% -6% 4% 44% 43% 56%
3,665 -1% -3% 12% -9% -13% 4% 56% 57% 58% Notes: MoM = current month relative to previous month, YoY = current month relative to same month last year, YTD = current year-to-date relative to last year-to-date; * Total market capitalisation of stocks listed on exchange. Source: World Federation of Exchanges (WFE), NZX, Credit Suisse research
Asian Exchange Watch 3 18 July 2014
Asian exchanges: Key trends (June 2014)—cont’d
Figure 5: North Asian exchanges have higher velocity Figure 6: June value traded up on May Log scale Average daily turnover (US$ bn) against velocity Monthly aggregate turnover value in US$ mn 250% 2,500,000 Japan China HK Australia Rest of Asia Shenzhen 200% 2,000,000
150% PSE 1,500,000 TSEC Tokyo 100% KRX Shanghai
1,000,000 NSE mn US$ Turnover 50% Bursa SGXSET
HKEx Turnover velocity p.a.) (% velocity Turnover 500,000 0% 8.0 9.0 10.0 11.0Bombay 12.0 13.0 14.0 15.0 16.0
-50% 0
Jul-11 Jan-13 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jan-12 Jul-12 Jul-13 Jan-14
Average daily turnover (log scale)
Figure 7: Domestic market cap up in June… Figure 8: …with trading volumes being up Monthly average market cap in US$ bn Monthly trading volume in ’000 25,000 900,000 Japan China HK Australia Rest of Asia Japan China HK Australia Rest of Asia 800,000
20,000 700,000
600,000 15,000 500,000
US$ bn US$ 400,000
10,000 '000 Turnover 300,000
200,000 5,000
100,000
0 0
Jan-13 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jul-13 Jan-14
Jan-08 Jul-11 Jan-07 Jul-07 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
Figure 9: Turnover market share volatile… Figure 10: …market cap shares stable Regional turnover value % share by country Regional market cap % share by country
21% 35%
5% Rest of Asia Rest of Asia 8% 17% 34% Australia Australia 6% Current month Current month 4% 8% HK 6% HK 15% 14% China China 36% 46% 21% 21% Japan Japan 27% 22% Previous month Previous month 32% 22%
Source for all charts: World Federation of Exchanges (WFE), NZX, Credit Suisse estimates
Asian Exchange Watch 4 18 July 2014
Asian exchanges: Key trends (June 2014)—cont’d
Figure 11: ASEAN exchanges June MoM mostly up Figure 12: …with YoY mixed Current month relative to previous month (%) Current month relative to same month last year (%)
40% 140% North Asia South East Asia East Asia Japan Pacific North Asia South East Asia East Asia Japan Pacific 120% 30% 100%
80% 20% 60%
10% 40%
20% 0% 0%
-20% -10% -40%
-20%
Shenzhen Hong Kong Korea Taiwan Indonesia Malaysia Philippines Singapore Thailand NSE Bombay Tokyo Australia NZ
Shanghai -60%
Shanghai Shenzhen Hong Kong Korea Taiwan Indonesia Malaysia Philippines Singapore Thailand NSE Bombay Tokyo Australia NZ
Value (US$) Volume Value (US$) Volume Figure 13: YTD trends mixed… Figure 14: …with velocity mixed MoM, also YoY Year-to-date this year relative to last year (%) Monthly velocity level
40% 300% North Asia South East Asia East Asia Pacific North Asia South East Asia East Asia Pacific 30% 250% 20%
10% 200% 0%
-10% 150%
-20% 100% -30%
-40% 50% -50%
-60%
Bombay Shenzhen Hong Kong Korea Taiwan Indonesia Malaysia Philippines Singapore Thailand NSE Tokyo Australia NZ
Shanghai 0%
Shenzhen Shanghai Hong Kong Korea Taiwan Indonesia Malaysia Philippines Singapore Thailand NSE Bombay Tokyo Australia NZ
Value (US$) Volume 41820 May-14 Jun-13 Figure 15: China and Japan ~60% of market cap… Figure 16: …and ~75% for value turnover Regional market cap % share by exchange Regional trading value % share by exchange
NZX NZX Shanghai ASX 0.0% 0% ASX 12.2% 4% 8.0% Shanghai 17% Shenzhen 7.4% Tokyo Tokyo 30% 22.4%
HKEx 16.6% Shenzhen 22%
Bombay 7.2% Bombay 1% NSE KRX 3% SET SGX NSE 6.7% 1% 1% TSEC HKEx 7.1% KRX SET TSEC Bursa 4% 8% 2.0% 7% SGX PSE Bursa4.7% 1% 3.0% 0.2% 2.7%
Source for all charts: World Federation of Exchanges (WFE), NZX, Credit Suisse estimates
Asian Exchange Watch 5 18 July 2014
Asian exchanges: Key news Australia / NZ ASX in the clear on service fees – The Australia, 24 June 2014
Markets operator, the Australian Securities Exchange, has defended its continuing monopoly on post-trade services for equities, with new research showing its overall costs are in line with those for similar services provided in like-sized financial centres.
ASX launches mFund settlement service – Financial Review, 26 June 2014
Investment platforms’ hallowed position as gatekeeper to the managed funds industry could be under attack with the launch of the Australian Securities Exchange’s mFund service. The settlement service was launched recently, allowing customers to buy and sell unlisted managed funds through their broker in the same way that they trade shares. OneVue group chief executive Connie Mckeage says mFund will allow - investors and advisers to have a direct relationship with their fund managers, as well as removing common platform conflicts such as the trend to push in-house products. OneVue, which also offers its own investment platform, has a substantial fund manager client base as part of its unit registry business. The company is one of 70 mFund foundation members, which also includes brokers and fund managers.
FMA gives NZX thumbs up but some pointers – Stuff.Co.Nz, 30 June 2014
A growing number of complaints of possible conflicts of interest at the NZX have led the Financial Markets Authority to recommend greater transparency at the exchange. The push for greater disclosure was a central theme of the yearly general obligations review of the NZX released by the FMA this morning. While the FMA was comfortable with the handling of conflicts, it was aware of growing concern among broking firms and observers, the review said. This concern was evidenced by an increased number of complaints to the FMA and swelling media commentary about potential conflicts at the exchange. If unchecked this could lead to diminished confidence in the market, the review said. FMA chief executive, Rob Everett, said this morning that the review had focused on agreed actions that could be taken by the NZX to improve this area of its operations.
Asian Exchange Watch 6 18 July 2014
China Securities regulator releases new rules for market exit – Ecns.Cn, 08 July 2014
Securities regulators here in China have released a draft of potential new rules connected to delisting for domestic companies. The China Securities Regulatory Commission says the refined delisting system will provide a range of options for companies that are voluntarily hoping to leave the equity markets. The new rules, among other things, will also force companies found to be engaged in fraud to be kicked out of the market within a year. For more on this, CRI's Paul James spoke earlier with Mike Bastin, Visiting Professor of China's University of Economics and Business.
Credit assets backed securities product listed on SSE – SSE, 25 June 2014
On 25 June, Ping An Bank No. 1 Petty Consumer Loan Assets Backed Securities were listed on the Shanghai Stock Exchange (SSE), with listed product varieties being 01 level in class A (“14 Ping An 01”), 02 level in class A (“14 Ping An 02”), and class B (“14 Ping An 03”). The Ping An Credit Assets Backed Securities listed and traded on the SSE are registered and held in custody at China Government Securities Depository Trust & Clearing Co., Ltd. (CDC). This symbolizes the debut of product of credit asset securitization on the SSE market, a great progress made in terms of the expanded pilot of credit asset securitization in China, and a great leap forward for the interflow of the bond markets. After the listing of Ping An Credit Assets Backed Securities, financial institutions, wealth management products issued by financial institutions, QFIIs/RQFIIs, and non-financial-institution legal persons meeting the requirements of suitability management for investors in credit assets backed securities may all participate in trading on the secondary market of the SSE.
China’s first IPOs in four months surge by daily limit – Bloomberg, 26 June 2014
China’s first companies to go public in four months jumped 44 percent on their first day of trading, while technology shares led gains in benchmark indexes. Shandong Longda Meat Foodstuff Co. (002726), Wuxi Xuelang Environmental Technology Co. and Feitian Technologies Co. surged by the maximum limit in Shenzhen within the first half hour of trading after their initial public offerings were each oversubscribed by at least 120 times. Han’s Laser Technology Co., a supplier to Apple Inc., advanced 5.8 percent. The Shanghai Composite Index (SHCOMP) rose 0.7 percent to 2,038.68 at the close, while the ChiNext Index of small-company shares jumped 2 percent. Chinese IPOs during the first two months of 2014 surged an average 43 percent in their trading debuts as the securities regulator pressured companies to price the deals at below-average valuations. Investors have flocked to new offerings this year as the Shanghai Composite declined, property prices dropped and slowing economic raised concerns of defaults in wealth-management products.
Asian Exchange Watch 7 18 July 2014
Hong Kong & SEA SGX launches liquidity hub in Hong Kong – Commodities, 08 July 2014
Singapore Exchange today announced the launch of its liquidity hub at Hong Kong Exchanges and Clearing Limited’s Data Centre. This initiative follows HKEx and SGX signing a memorandum of understanding in December 2013 to cooperate in several areas of common interest, including enhancing connectivity through points of presence in each other’s data centres. SGX CEO Magnus Böcker said, “We are pleased to move forward on our cooperation with HKEx. This is a first step towards even closer collaboration between the two exchanges. SGX’s customers in Hong Kong can now look forward to benefit from this liquidity hub as it offers them a cost effective and convenient way to access the world’s biggest offshore market for Asian equity futures at SGX.” HKEx Chief Executive Charles Li said, “We welcome SGX to the Hosting Services ecosystem at our Data Centre. We will continue to explore ways we can cooperate in areas of common interest.”
Hong Kong stock exchange trading slumps – Money Beat, 09 July 2014
Equity trading volumes on Hong Kong’s stock exchange slumped by 25% in June from a year earlier and 7% from May while derivative volumes tumbled by 24% on year and 6% on month. This is in a period when stocks were rallying. At the end of June 2014 the Hang Seng Index stood at 23,191, a gain of 11.4% compared to its close of 20,803 at end of June 2013. Hong Kong Exchanges & Clearing Ltd., or HKEx, draws around 70% of its revenues from the value of trades in equities and derivatives on its bourse with a further 15% coming from listing fees, Credit Suisse estimates. Hong Kong isn’t alone in being hit by a slowdown in trading. Policy makers around the world are warning that the tranquil mood in markets may lead to complacency and a repeat of the misguided risk taking that lead to the 2008 financial crisis.
SGX: More retail investors joining Singapore stock market– Channel News Asia, 14 July 2014
More retail investors have been entering the stock market over the past year. According to Singapore Exchange (SGX), over 68,000 new share trading accounts were added in the last 12 months, bringing the total to 1.6 mn accounts. A record high of 844,000, or 52 per cent of accounts, had holdings. Singapore Exchange said its stock trading school – the SGX Academy – has reached 85,000 people so far in the current financial year. This is more than double the 30,000 people it had, a year earlier. But SGX wants to do more to spread the word on stocks and shares. Out of the 3 mn-odd working population in the country, SGX said two in three are not in the stock market. SGX said there are a few common reasons why people do not dabble in stocks - they do not know how to start, do not know where to start, or do not have the time and money.
Asian Exchange Watch 8 18 July 2014
Dark pool scrutiny no slam dunk for traditional exchanges – Reuters, 13 July 2014
The regulatory noose is tightening around dark pools, private share-trading venues that promise anonymity for specialist investors, offering a chance for rival exchanges in the United States and Europe to take back market share. But traditional stock- exchange operators such as LSE Group , NASDAQ-OMX and Euronext cannot just expect business to drop back into their laps after years of seeing market share slip away to more opaque platforms that offer privacy or to upstart venues with slick technology. A recent batch of enforcement actions against dark pools run by big global banks, coupled with incoming rules in Europe that aim to make markets more transparent by putting a cap on dark-pool trading, has alerted investors to the risks of trading in the murkier areas of the market. The risks range from concern over a lack of disclosure about how the pools operate and price trades to fears that some give an unseen advantage to high-speed traders using sophisticated technology and computer algorithms. But in a tough environment where overall trading volumes have yet to return to pre-crisis peaks, it will be no mean feat to persuade professional investors drawn to the lower costs and price stability of dark pools to change their habits and concentrate more trades on a smaller number of venues.
Asian Exchange Watch 9 18 July 2014
India MCX might also have to divest in MCX-SX –Business Standard, 14 July 2014
Along with FTIL, MCX might also need to initiate disinvestment in MCX-SX in the coming weeks. The capital market regulator has rejected the commodity bourse's plea not to consider it a person acting in concert (PAC) with FTIL, which has been declared not fit and proper due to its role in the Rs5,600 crore National Spot Exchange (NSEL) scam. The thinking within Sebi is that MCX and FTIL are still PACs and hence, MCX, which holds around 38 per cent stake (including warrants) in MCX-SX, will have to divest as well. "Any regulator or authority is yet to declare FTIL and MCX as two separate entities. Sebi does not want to pre-empt and pass a decision that could be construed as the markets regulator viewing the two entities as separate," said a person close to the developments. MCX, in January, had approached Sebi with a proposal that its holding in MCX-SX shouldn't be clubbed with that of FTIL. It was hopeful that Sebi would grant the request as FTIL's voting rights in MCX have been cancelled
MCX-SX networth nears floor level, auditor pens qualification – The Wall Street Journal, 24 June 2014 The networth of MCX Stock Exchange Ltd (MCX-SX) has eroded significantly in 2013- 14, according to a financial statement released by the exchange during the weekend. The exchange’s net worth was Rs.120 crore as on 31 March, down from Rs.275 crore at the end of the previous fiscal year and close to the minimum regulatory requirement of Rs.100 crore. The company’s auditor qualified the statement saying MCX-SX had not provided for infrastructure and software support expenses worth Rs.10.71 crore payable to parent firm Financial Technologies (India) Limited (FTIL) for various long- term contracts. Japan Japan Exchange Group and Bank of China sign a memorandum of understanding– GlobeNewswire, 11 July 2014 Today, Japan Exchange Group, Inc. (TSE:JPX) and Bank of China Limited (BOC) signed a comprehensive memorandum of understanding (MOU) on establishing and developing a yuan-denominated financial instruments market in Japan. Under the MOU, JPX and BOC will jointly develop yuan-denominated products and create a framework to facilitate the clearing and settlement of yuan-denominated products in Japan. To realize our aims, we will be considering the provision of yuan settlement services by BOC in Japan and its membership of a Japanese clearinghouse. We will also work together to attract more investment from China to the Japanese market. To foster a mutually beneficial long-term partnership, JPX and BOC will also strive to share information and expertise across a broad range of issues and build a framework for cooperation and collaboration through personnel exchanges.
Asian Exchange Watch 10 18 July 2014
Asian exchanges: Recent research
(Click on links to access full research reports) Australia ASX: Strong capital raisings continue, 03 July 2014 June 2014 activity levels: Strong capital raisings (particularly IPOs) continued into June 2014 activity levels ($5.6bn of capital issued), with seasonally stronger ASX24 volumes, stronger cash market volumes (daily avg volumes +15% MoM, -12% YoY), however ASX Derivatives remained subdued but are up from their trough in April 2014. Investment view: At ~16.8x prospective earnings and at an ~11% premium to the ASX200 (below the three- year average of 20%) the valuation is undemanding in our view. While there is some scope for further earnings upside (refer "ASX: Quantifying the growth initiatives", 19 May 2014), ASX also offers less earnings volatility than the broader financials sector and a 5.3% dividend yield. In the current environment of earnings uncertainty and market volatility, we view ASX as somewhat of a safe haven. ASX: Strong capital raisings in May 2014, 04 June 2014 May 2014 activity levels: The highlight of May 2014 activity levels was the A$8.7 bn of capital issued (the highest since December 2013), with soft activity levels continuing in cash market turnover, ASX24 volumes and ASX derivatives volumes (all down year-on- year, but up month-on-month). Earnings changes: While FY14E earnings are largely unchanged we have downgraded FY15E and FY16E by 1% with lower cash market turnover, ASX derivatives volumes and ASX24 volumes offset by higher capital raisings (particularly in FY14E following the strong May 2014 data). ASX: Quantifying the growth initiatives, 19 May 2014 We have increased our target price to A$37.00 (from A$35.20) and upgraded our rating to a NEUTRAL (from Underperform). We have increased our EPS estimates by 1.6% in FY14E and 1.9% in FY15E. New initiative potential (A$21-91mn): In addition to a recovery in core earnings, we estimate that ASX has invested in growth initiatives that could deliver between 3% and 12% in incremental revenue growth over the coming years. Key initiatives include mFund, ASX Bookbuild, the clearing of OTC derivatives and the benefits of a more developed corporate bond market. Individually, they are unlikely to be material to future earnings; however, there is the upside risk that one of these initiatives becomes a more meaningful contributor. ASX: Quantifying the revenue opportunity of mFund, 29 April 2014 Following the release of ASX's mFund pricing schedule we have quantified the revenue opportunity of mFund once it has passed through its start-up phase (say FY17E) to be potentially ~A$6 mn per annum with a blue sky revenue opportunity of ~$29 mn. This broad range equates to 1-4% of FY16E revenues (none of which is in our estimates). ASX revenues have been relatively flat over the past six years (FY08-13) with ASX investing in a number of new business initiatives (e.g., mFund, clearing OTC derivatives, ASX Bookbuild, encouraging a listed bond market) in order to try and achieve more growth. 1H14: Revenue growth across the board, 14 February 2014 ASX reported 1H14 NPAT of A$189.6 mn, slightly below our A$191 mn (consensus A$187 mn) and an interim dividend of 88.2cps (consensus 89.8cps). Revenue was slightly above our expectations; however, this was offset by an 8.3% increase in operating expenses. We maintain our UNDERPERFORM rating with a A$35.20 target price. Investment view: ASX is trading at a ~20% P/E premium to the market, the middle of the 10-30% range it has traded at over the past five years. While the 1H14 operating revenue growth was 8.0% on the previous corresponding period (pcp), the growth on 2H13 was only 5.4% with the decline in activity late in 1H14 flowing through to the start of 2H14.
Asian Exchange Watch 11 18 July 2014
Hong Kong HKEX: June volumes remain very weak, but recent signs of improvement, 08 July 2014 We have left our forecast unchanged following very weak June 2014 market statistics albeit higher in July. Key trends in June were as follows: Equity markets (45% of revenues): June 14 average daily turnover (ADT) was down 25% YoY (down 7% MoM) to HK$51.4 bn, well below 2013 average of HK$63 bn and our 2014 forecast of HK$65.7 bn, with July volumes improving slightly so far. Derivative markets (14%): June derivative trading volumes were down 24% YoY (-6% MoM), while open interest (leading index) was down 1% YoY. LME (13%): LME recorded stable volume growth in June, down 0.6% YoY, slightly above our current forecasts. Listings (12%): There were 18 IPOs in June, with total funds raised being HK$47 bn (HK$216 bn for YTD 2014) HKEX: Anaemic equity market volumes (Downgrading to Neutral), 10 June 2014 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). Key trends in May were as follows: (1) Equity markets (45% of revenues): May 2014 average daily turnover (ADT) was down 8% YoY (down 15% MoM) to HK$55.5 bn, well below the 2013 average of HK$63 bn and our 2014 forecast of HK$68 bn, with June volume so far remaining at similar subdued levels. (2) Derivatives markets (14%): May derivative trading volumes were down 12% YoY (-12% MoM), while open interest (leading index) was up 9% YoY. (3) LME (13%): LME recorded weak volume growth in May, down 5.1% YoY, below our current forecasts. (4) Listings (12%): There were seven IPOs in May, with total funds raised being HK$33 bn (HK$169 bn for 2014 YTD). HKEX: 1Q14 in line, but recent volumes weak, 08 May 2014 HKEx reported an in-line 1Q14 NPAT of HK$1,178 mn, up 5.1% YoY (1.5% below the CS forecast). However, given the recent weaker volumes, we have reduced our forecasts by around 4%. We retain our HK$165.00 target price, implying ~30x 12-month forward earnings (relative to its 25x eight-year average), with increasing volumes following the launch of SH-HK Stock Connect key to sustain the current share price, given recent volumes are quite weak. HKEX: Further details released on 'Shanghai-HK Stock Connect', 29 April 2014 HKEx has provided further details on the 'Shanghai-Hong Kong Stock Connect' originally announced on 9 April 2014 (a media briefing was held, but analysts/investors given just five minutes' notice). Key new details released relevant for HKEx investors are as follows: (1) official launch date remains "in ~six months"; (2) fees subject to existing fees and levies charged on respective markets (with HKEx/SSE sharing revenue on a "fair and equitable basis"); (3) trading of SSE securities "open to all HK and overseas investors including institutional and individual investors" (no minimum aggregate balance like SH investors); (4) HK investors are prohibited from naked short-selling; and (5) SH investors cannot participate in margin trading or securities lending. HKEX: Through train fever—Near-term implications for HKEx, 11 April 2014 Following the announcement of the 'pilot' HK/China mutual market access scheme (to commence in at least six months' time), we have examined the nearer-term potential impact for HKEx: Increased revenues from quota. If we assume same velocity as Shenzhen Exchange's (~300%), full QDII2 quota use would imply 5% revenue upside. HKEx will also earn fees on SFII2 trading. Increased velocity on HKEx. Current velocity on HKEx is close to all-time lows and the lowest among global exchanges. We see a potential boost in HKEx market activity (as happened last time in 2007) as much more material than direct revenue increase from the quotas. HKEX: The through train arrives—Pilot mutual market access announced, 10 April 2014
Asian Exchange Watch 12 18 July 2014
The CSRC has announced a pilot mutual market access scheme to commence in at least six months' time. Under the initial pilot Hong Kong investors will be able to trade specified Shanghai stocks through registered local brokers and Chinese investors will be able to trade specified Hong K-listed shares. For Hong Kong investors, the total initial quota is Rmb300 bn, with a Rmb13 bn daily trading limit (relative to ~Rmb200 bn total China market current average daily trading volume). For mainland investors, the total initial quota is Rmb250 bn, with a Rmb10.5 bn daily trading limit (relative to ~Rmb56 bn (HK$70 bn) ADT). HKEX: Free optionality on mutual market access and LME changes, 02 April 2014 21st Century Business Herald (2 April 2014) reported that HKEx and Shanghai Stock Exchange have reached a consensus on network inter-operability, with QDII2 allocations submitted through HKEx execution. Whilst we see the full benefits from mutual market access between HK and China as some way off, we do realise that the opportunity here is massive and could be a game changer for HKEx. HKEX: Cost control and LME driving 4Q13 miss, 26 February 2014 We have decreased our earnings forecast by 1-2% after a weak HKEx 4Q result with NPAT 16% below forecast. Final dividend of HK$1.72 keeps the pay-out ratio stable at a historical 90%. FY13 NPAT of HK$4,552 mn was up 5% YoY, but 4.5% below forecast. Key highlights: We do note that the weak 4Q result was due to (1) higher operating expenses from IT costs and (2) LME 4Q trading revenue. Both these issues should reverse in our view as LME Clear comes on-line from 2H14 and LME can re-price from 1H15. We retain our HK$145.00 target price, implying 28x 12-month forward earnings (relative to its 25x eight-year average), with volumes slightly below our forecasts. HKEX: Robust start to 2014, 11 February 2014 We have left our forecasts unchanged after reviewing January market statistics, which are running slightly above our forecasts. Key trends in January 2014 were as follows: Equity markets (45% of revenues): January 2014 average daily turnover (ADT) was down 13% YoY to HK$68 bn (but +20% MoM), mainly due to high base same month last year, but above 2013 average of HK$63 bn and our 2014 forecast of HK$67 bn. The first week of February saw slight weakening of volumes, with ADT of HK$66 bn. Derivatives markets (15%): January derivative trading volumes were down 5% YoY (+15% MoM), while open interest (leading index) was up 7% YoY.
Asian Exchange Watch 13 18 July 2014
South East Asia SGX: Very weak equity weak volumes, but derivatives improving, 03 July 2014 We downgrade our earnings estimates by 1-6% following our review of June 2014 trading data. Key trends in June 2014 were as follows: Equity markets (33% of revenues): June average daily turnover (ADT) was down 39% YoY to S$0.98 bn, and down 16% on May and down 20% on April (relative FY14E of S$1.1 bn and FY15E of $1.3 bn). Derivatives markets (32%): Derivative volume was down 20% YoY in June 2014, but recovered slightly compared to last few months, up 6% on May and up 1% on April. Depository services (13%): These fees are more based on equity volumes than value, with volumes down 8% YoY in June. 4) Listings (10%): There were only two equity listings in the month, with bond listings still the main source of new fund raisings. Bursa Malaysia: Weaker equities, while derivatives strong, 03 July 2014 We have left our earnings unchanged following a review of June 2014 market statistics, with equity market average daily turnover (ADT) down 23% YoY, but derivative growth +18% YoY. Key trends were as follows: Equity market (53% of revenue): June ADT was RM1.9 bn, down 23% YoY, -18% MoM and well below our forecasts of RM2.3 bn for 2014 (with 2013 ADT average RM2.2 bn). Derivatives market (15% of revenue): Derivative volumes were up 18% YoY and +14% MoM. Depository services (10% of revenue): These fees are based more on equity volumes rather than value, with volumes in June 2014 down 14% YoY. SGX: Equity volumes stable, but derivatives weaker, 10 June 2014 We have downgraded our earnings by 3-6% following a review of May 2014 trading data, with stabilising volumes in equities but weaker derivatives. Key trends in May 2014 were as follows: (1) Equity markets (33% of revenues): May average daily turnover (ADT) was down 37% YoY to S$1.17 bn, down 5% on April and up 3% on March (relative to our FY14 forecasts of S$1.1 bn). (2) Derivative markets (32%): Derivative volumes were down 26% YoY in May 2014 and also weakened compared with the past few months, down 4% on April and down 14% on March. (3) Depository services (13%): These fees are based more on equity volumes than value, with volumes down 43% YoY in May. (4) Listings (10%): There was only one equity listing in the month, with bond listings still the main source of new fund raisings. Bursa Malaysia: Stable market volumes, 10 June 2014 We left our earnings unchanged following a review of May 2014 market statistics, with equity market average daily turnover (ADT) down 20% YoY, and derivative growth -3% YoY. Key trends were as follows: (1) Equity market (53% of revenue): May ADT was RM2.3 bn, down 20% YoY, -3% MoM and in line with our forecasts of RM2.4 bn for 2014 (with 2013 ADT average RM2.2 bn). (2) Derivatives market (15% of revenue): Derivative volumes were down 3% YoY, the first negative month after three consecutive positive months. (3) Depository services (10% of revenue): These fees are based more on equity volumes rather than value, with volumes in May 2014 down 28% YoY. Bursa Malaysia: Continued robust market volumes, 06 May 2014 We leave our forecasts unchanged following a review of April 2014 market statistics, with equity market average daily turnover (ADT) up 29% YoY, and derivative growth at 3% YoY. Key trends were as follows: (1) Equity market (53% of revenue): April ADT was RM2.4 bn, up 29% YoY, in line with our forecasts (RM2.4 bn for 2014), but above 2013 ADT average of RM2.1 bn. (2) Derivatives market (15% of revenue): Derivative volumes were up 3% YoY, and volumes growth stayed positive for three consecutive months. (3) Depository services (10% of revenue): These fees are based more on equity volumes rather than value, with volumes in April 2014 up 137% YoY.
Asian Exchange Watch 14 18 July 2014
SGX: 3Q14 result: Earnings now troughed? (5% ahead of expectations), 23 April 2014 SGX reported 3Q14 NPAT of S$75 mn, down 22% YoY, but up 1% on 2Q14 and S$75 mn, -2% YoY and 5.5% ahead of our forecasts and consensus. Weaker YoY growth was mainly due to weaker equity (-32%), with derivatives revenue with impact subdued by strong cost control. We leave our target price unchanged at S$7.75, and retain our NEUTRAL investment rating. The current share price implies 20x 12-month forward earnings, close to its long-term average of 21x (with current volumes tracking in line with our forecasts). Bursa Malaysia: Strong 1Q14 result (well ahead of consensus), with recent volumes strong, 17 April 2014 We have increased our Bursa earnings by 2-3% following 1Q14 strong NPAT of RM45.1 mn, up 18% YoY (in line with CS, but well ahead of consensus). Compositionally, higher staff costs were offset by lower D&A and slightly lower tax rate. Valuation unchanged at RM9.50, implying 19x 12-month forward earnings (relative to its long-term average at 27x). We retain our OUTPERFORM investment rating, underpinned by the strong dividend yield (with special dividends likely next few years). SGX: Volumes slowly recovering, 07 April 2014 We leave our earnings unchanged following a review of March 2014 trading data, with improving volumes in both equities and derivatives over the past several months. Key trends in March 2014 were as follows: (1) Equity markets (33% of revenues): March average daily turnover (ADT) was down 28% YoY to S$1.14 bn; but up 9% on February, and up 6% on January (and relative to our FY14 forecasts of S$ 1.2bn). (2) Derivatives markets (32%): Derivative volumes were down 1% YoY in March 2014, but up 18% on February and up 8% on January, and ~14% below May and June 2013 highs. (3) Depository services (13%): These fees are more based on equity volumes than value, with volumes down 45% YoY in March. Bursa Malaysia: Continued robust market volumes, 03 April 2014 We have left our forecasts unchanged following review of March 2014 market statistics, with equity market average daily turnover (ADT) up 21% YoY, and derivative growth at 23% YoY. Key trends were as follows: (1) Equity market (53% of revenue): March ADT was RM2.2 bn, up 21% YoY, slightly below our adjusted forecasts (RM2.4 bn for 2014), but above 2013 ADT average RM2.1 bn. (2) Derivatives market (16% of revenue): Derivative volumes were up 23% YoY (up 28% MoM), and volumes growth stayed positive for two consecutive months.
Asian Exchange Watch 15 18 July 2014
Japan JPX: Fine-tuning our estimates to reflect data for June, recent market trends, 03 July 2014 Outlook for a market rally keeping the share price high: We revise our estimates for Japan Exchange Group (JPX) to reflect trends in the spot and derivatives markets in June. Figures for the spot market were slightly ahead of our expectations in Apr–Jun, but weakness for derivatives in April and May had a substantial impact. We maintain our ¥1,800 target price and UNDERPERFORM rating. As before, we believe the JPX group’s earnings do not justify the share price. Valuation: Our ¥1,800 TP uses FY3/15E BPS of ¥779.4 (previously ¥779.0) and a P/B of 2.31x. We base our multiple on our outlook for ROE of 17.35% (17.31%) and a discount rate of 7.5%. This discount rate assumes an equity risk premium of 6.5%. An equity risk premium of 5.5% would suggest a share price of about ¥2,080, reflecting expectations for a rally for the market. JPX: FY3/15 guidance based on conservative assumptions but stock still looks pricey, 30 April 2014 Applying IFRS from FY3/15: Japan Exchange Group's (JPX) FY3/14 results announced on 28 April were largely in line with our forecasts. Guidance for FY3/15, on a Japanese accounting standards basis, is for a 31% YoY decline in RP to ¥36.5bn and a 30% drop in NP to ¥21.0bn. The stock fell sharply in reaction during the afternoon session of 28 April. As in the past, JPX’s projections are not based on current market trends but on the more conservative assumptions in its medium-term plan. These include average daily trading value for stocks (TSE First and Second Section, Mothers, JASDAQ listed stocks as well as ETFs and REITs) of ¥2.1 tn. Reduce target price: Considering recent market trends, we lower our forecasts for JPX and reduce our target price from ¥2,080 to ¥1,800 (potential return –12.7%). JPX: Earnings and dividend guidance raised, 20 March 2014 Lowering our forecasts on rising costs: The Japan Exchange Group (JPX) announced upward revisions to its FY3/14 earnings and dividend forecasts today (20 March). The new guidance is based on upward revisions to assumptions for average daily trading value for cash equities and for volumes for futures and options contracts. The company raised its trading value outlook from ¥2.8 tn to ¥2.9 tn, while the volume revisions were led by a boost to Nikkei 225 futures from 213,000 to 219,000 contracts. The exchange operator also raised its per-share dividend forecast from ¥40 to ¥43. Valuation: We base our ¥2,080 TP on a P/B of 2.67x (previously 2.61x) on our downwardly revised FY3/15E BPS of ¥780.6 (¥885.1). Our new fair-value P/B assumption is based on forecast ROE of 17.34% (16.51%) and a discount rate of 6.5%. JPX: Raising our forecasts, but shares look overvalued, 28 January 2014 Share price remains elevated amid optimism on broader market: We raise our forecasts for Japan Exchange Group (JPX) to reflect an upward revision of market assumptions (including average daily trading value of ¥2.8 tn from 4Q) reflecting nine-month results and current market conditions, and increase our target price from ¥1,820 to ¥2,310 (potential return – 10.5%). However, the shares remain overvalued, in our view, and we maintain our UNDERPERFORM rating. Valuation: We raise our target price to ¥2,310 as we have revised up our forecasts and shifted the base year from FY3/14 to FY3/15.
Asian Exchange Watch 16 18 July 2014
New Zealand NZX: Investor briefing targets growth, 11 April 2014 Event: NZX hosted an investor briefing on 9 April 2014 where it outlined some ambitious five-year growth targets. The most notable was a five-year revenue CAGR of 7.5% for its key Capital Markets revenue segment. This seems ambitious given FY13 was boosted by a buoyant IPO market and circa one-third of CM revenue comes from lower growth areas like annual listing fees and participant fees. Achieving NZX’s targets will require a continued strong IPO pipeline, continued strong growth in trading and clearing activity, cash derivative trading being successful, and/or increases in service charges greater than we forecast (or a combination of the above). If NZX’s targets were met, it would lift our DCF valuation circa 20-25 cps. Given this is a five-year target we will be able to assess NZX relative to milestones. NZX: FY13 result – decrease target price, 21 February 2014 Event: The FY13 result was marginally ahead of our expectations driven by stronger revenue from Issuer services and Information partially offset by higher-than-forecast employee costs at the operating level and NZX benefiting from a lower-than-forecast tax rate. We have tweaked our forecasts, largely reflecting a subdued outlook for the grain trading business with forecast EBITDAF decreasing 1% in both FY14 and FY15. We have reduced our target price from NZ$1.26 to NZ$1.25 and retain our UNDERPERFORM rating on the stock given the relatively full valuation multiples and relatively flat near-term operating earnings outlook. NZX: Can the momentum keep going? 17 January 2014 Event: It has been a record year for NZX with strong capital raising and trading activity. December quarter operating metrics showed the benefit of this activity with record average daily volume, which will have also flowed through to strong clearing activity. Encouragingly terminal numbers have also picked up. The main question for investors is whether NZX can support continued earnings momentum given the supportive market in 2013. We have made minor changes to our forecasts reflecting the release of the December quarter metrics. This resulted in $0.1mn and $0.3mn reductions in our FY13 and FY14 EBITDAF forecasts, respectively. India MCX: Structural growth potential continues, 02 November 2012 2Q FY13 results were operationally in line with expectations. While there was sequential improvement given an improvement in trading volumes, YoY comparisons remain weak given difficult comparisons with high gold and silver trading volumes last year. We believe that there is multi-year structural scope for volume expansion given: (1) low trading velocity in India; (2) potential regulatory changes; (3) scope for improving hedging activity and retail participation in India; and (4) the relatively small size as compared to global exchanges. MCX: MCX-SX's equity product kicks off – 11 September 2012 MCX-SX has kick-started roadshows for brokers across the country for its equity products with its Mumbai roadshow being extremely well attended. It plans to launch its first products in December to coincide with the Diwali festival in India. MCX has a 38% economic interest in MCX-SX (5% equity + 33% warrants). MCX-SX started with currency derivatives in December 2008 and recently obtained regulatory approvals for its equity products. Besides currency and equity products, MCX-SX will have wholesale debt and interest rate products as well. MCX-SX has announced 30-50% lower transaction fees as compared to the NSE. It has also introduced discounted membership fees until 18 December. Details of the number of companies that will be initially listed and exact products are not known at this stage.
Asian Exchange Watch 17
Watch Asian Exchange Figure 17: Global exchanges (and exchange-related) financial metrics EPSg Cost to EBITDA P / BV ROE P / NTA ROTE Payout Div Yld Reporting Market Monthly Monthly Price 52 Week 12mth 12mth Inv'ment Year Consensus PE (x) 2yr income margin (x) (%pa) (x) (%pa) ratio (%) (%pa) Price movement (%) Company Currency Cap Volume Liquidity 17-Jul high/low Target Return Rating End PE (x)* 12mth forward diluted (Credit Suisse forecasts) 1wk 1mth 1qtr 1hy 1yr YTD US$m US$m % local local % 7 30 91 182 365 31-Dec Australia & NZ ASX.AX ASX AUD 6,566 359 5.5% 36.20 34.16-37.85 37.00 7.5% NTRL 30-Jun 17.2x 16.9x 5% 24% 76% 1.8x 10.9% 4.9x 28.9% 90% 5.3% 0.9% 2.1% 2.8% 0.0% 4.1% -1.5%
CPU.AX Computershare USD 6,540 352 5.4% 12.55 9.62-12.90 12.60 2.9% NTRL 30-Jun 17.4x 17.0x 73% 61% 4.5x 26.0% -9.3x -54.7% 43% 2.5% -0.1% 1.6% 3.3% 8.8% 24.3% 10.3% IRE.AX Iress AUD 1,285 78 6.1% 8.62 7.80-10.38 9.95 20.4% NTRL 31-Dec 19.2x 16.6x 17% 66% 52% 4.2x 24.9% -18.6x -111.8% 90% 5.0% 2.1% 6.0% 5.6% -8.5% 10.5% -8.7% NZX.NZ NZX NZD 297 6 2.1% 1.34 1.21-1.40 1.25 -2.2% UPFM 31-Dec 21.0x 21.0x 11% 59% 57% 6.8x 32.4% 86% 4.5% 2.3% 1.5% 8.1% 8.1% 0.0% 8.1% 14,688 795 5.4% 18.7x 17.9x 11% 56% 62% 4.3x 23.6% -7.7x -45.9% 77% 4.3% 0.6% 2.2% 3.4% 3.3% 13.6% 3.3% Asia BMYS.KL Bursa Malaysia MYR 1,372 40 2.9% 8.19 7.05-8.42 9.50 21.1% OPFM 31-Dec 21.6x 19.7x 16% 42% 67% 6.7x 33.9% 7.1x 36.1% 99% 5.1% 1.7% 6.0% 7.6% 3.0% 0.2% -0.5% 0388.HK HKEx HKD 23,129 1,852 8.0% 153.60 113.20-154.20 160.00 7.2% NTRL 31-Dec 30.1x 29.6x 25% 31% 76% 6.9x 23.2% 24.9x 84.1% 89% 3.0% 0.7% 6.1% 6.4% 19.8% 27.4% 18.8% MCEI.BO MCX INR 671 336,706 50149.0% 794 0,242-0,794 NR na NR 31-Mar 26.7x 26.7x 56% 3.1x 11.7% 3.1x 11.7% 35% 1.5% 16.4% 29.0% 34.6% 68.2% 9.5% 66.2% 8697.T Japan Exchange JPY 6,507 910 14.0% 2,402 1,536-3,070 1,800 -22.8% UPFM 31-Mar 20.1x 17.9x 54% na 3.0x 16.8% 4.9x 27.2% 40% 2.2% 0.8% -1.3% 5.3% 5.3% -11.9% -19.6% SGXL.SI SGX SGD 6,018 169 2.8% 6.97 6.68-7.68 7.50 11.5% NTRL 31-Dec 20.4x 21.6x 13% 39% 77% 7.5x 35.3% 7.5x 34.7% 85% 3.9% 0.4% 0.1% 0.0% -1.6% -6.6% -4.0% 37,698 339,676 901.1% 23.8x 23.1x 27% 42% 73% 5.4x 24.2% 9.5x 38.7% 70% 3.2% 1.0% 4.3% 5.8% 14.1% 13.9% 8.7% Africa & Middle East JSEJ.J JSE ZAR 787 22 2.8% 97.04 75.13-101.52 NR na NR 31-Dec 14.4x 14.4x na na na na na 4.0% -1.0% -3.3% 5.8% 12.5% 28.1% 8.7% DFM.DU Dubai Fin Market AED 7,841 468 6.0% 3.60 0,002-0,004 NR na NR 31-Dec 33.7x 33.7x 44% 16% 94% 3.5x 10.4% 3.5x 10.4% 68% 2.9% 11.1% -7.0% 2.6% 41.7% 81.8% 45.7% 8,628 490 5.7% 24.1x 24.1x 44% 16% 94% 3.5x 10.4% 3.5x 10.4% 68% 3.5% 10.0% -6.6% 2.9% 39.1% 76.9% 42.4% Europe BME.MC Bolsas Y Mercados EUR 3,715 28 0.7% 32.85 0,019-0,036 NR na NR 31-Dec 16.9x 16.9x 6% 31% 69% 6.8x 40.5% 6.8x 40.5% 5.3% 0.0% -4.0% 10.0% 6.4% 71.9% 18.8% DB1Gn.F Deutsche Boerse EUR 14,103 5 0.0% 54.02 0,052-0,063 51.00 -1.6% UPFM 31-Dec 13.7x 14.5x 5% 51% 60% 1.4x 9.9% 2.5x 17.3% 59% 4.0% 1.0% -3.6% 1.5% -10.3% 1.1% -10.0% EXCr.AT Hellenic Exchanges EUR 685 61 8.9% 7.75 0,005-0,009 NR na NR 31-Dec 17.9x 17.9x 7% 31% 64% 2.8x 15.4% 2.8x 15.4% 4.0% 0.9% -8.6% -8.6% -4.2% 33.1% -0.7% IAP.L ICAP GBP 3,923 181 4.6% 354 353-459 370 10.8% UPFM 31-Mar 11.1x 11.9x 77% 67% -2.4x -20.8% -1.1x -9.6% 71% 6.2% 0.1% -6.8% -11.7% -21.8% -8.8% -21.7% LSE.L LSE GBP 9,088 251 2.8% 1,950 1510-2038 2,350 22.2% OPFM 31-Dec 17.7x 15.6x 2.6x 16.4% -27.7x -177.6% 16% 1.7% 1.8% 2.2% 6.0% 6.2% 22.6% 12.5% MOEX.MM Moscow Exchange RUB 3,883 157 4.1% 61.49 49.13-69.80 67.00 13.5% NTRL 31-Dec 10.8x 11.0x 8% na 73% 1.3x 12.2% 2.1x 18.6% 45% 4.5% -1.0% -8.2% 7.9% 11.8% 13.9% -5.0% GPW.WA Warsaw Exchange PLN 505 16 3.1% 36.92 35.15-44.74 NR na NR 31-Dec 11.8x 11.8x 5% 47% 76% 2.4x 20.6% 2.4x 20.6% 4.6% -0.3% -4.9% -3.4% -5.5% -3.6% -11.0% 35,901 28 0.1% 14.3x 14.2x 6% 47% 68% 2.1x 13.5% -1.7x -10.7% 48% 4.3% 0.8% -3.1% 2.5% -3.1% 14.7% -1.9% Americas BOLSAA Bolsa Mexicana MXN 1,261 53 4.2% 27.64 22.99-35.61 30.00 12.7% NTRL 31-Dec 20.6x 20.8x 7% 54% 71% 2.9x 13.8% 6.5x 31.0% 85% 4.1% 0.1% -0.7% 3.1% -1.5% -9.9% -7.7% BVMF3.SA Bovespa BRL 10,276 128 1.2% 12.21 9.23-13.35 13.50 14.2% OPFM 31-Dec 18.3x 17.1x 5% 33% 1.2x 7.0% 14.4x 84.4% 3.6% 3.7% 0.0% 6.7% 21.1% -3.5% 10.4% CBOE CBOE USD 4,140 293 7.1% 48.15 44.59-58.61 49.00 3.8% UPFM 31-Dec 20.8x 21.5x 12% 43% 54% 19.6x 92.3% 19.6x 91.2% 47% 2.1% 2.6% -4.3% -7.8% -3.5% -1.0% -7.3% CTIP3.SA Cetip BRL 3,631 75 2.1% 31.38 22.10-32.03 33.00 10.1% OPFM 31-Dec 16.3x 15.7x 7% 32% 71% 4.1x 26.0% 16.6x 105.8% 57% 5.0% 0.0% 0.0% 12.5% 35.9% 37.8% 29.7% CME CME USD 23,885 683 2.9% 71.13 66.95-81.99 72.00 7.8% NTRL 31-Dec 20.3x 21.9x 12% 1.1x 5.1% -4.0x -18.1% 107% 6.6% 0.9% -1.6% 2.6% -5.8% -3.9% -9.3% ICE ICE USD 22,020 714 3.2% 191.22 176.78-227.82 215.00 12.4% OPFM 31-Dec 18.4x 19.7x 21% 36% 55% 1.5x 7.7% -4.8x -24.3% 0% 0.0% 3.7% -3.5% -3.6% -7.6% 5.4% -15.0% MKTX MarketAxess USD 1,832 105 5.7% 48.58 47.50-70.60 52.00 8.3% UPFM 31-Dec 24.1x 26.0x 15% 49% 54% 4.6x 17.7% 4.6x 17.6% 31% 1.2% 2.3% -13.6% -12.6% -21.5% -6.3% -27.4% NDAQ NASDAQ OMX USD 6,931 387 5.6% 40.61 29.78-40.79 42.00 4.9% OPFM 31-Dec 13.2x 13.1x 13% 53% 50% 1.1x 8.1% -3.4x -26.0% 20% 1.4% 3.8% 7.2% 16.0% 2.2% 19.0% 2.0% X.TO Toronto Exchange CAD 3,096 17 0.6% 57.01 43.15-60.69 NR na NR 31-Dec 13.0x 13.0x 50% 54% 1.0x 7.9% 1.0x 7.9% 42% 2.8% 0.1% -4.0% 0.5% 16.8% 26.7% 11.7% 77,072 2,454 3.2% 18.3x 18.8x 12% 44% 58% 4.1x 20.6% 5.6x 29.9% 49% 3.0% 2.4% -1.6% 2.1% 0.7% 4.1% -4.9%
Global exchange related 165,359 342,952 207.4% Arithmetic average 18.3x 18.2x 13% 46% 64% 3.9x 19.8% 2.6x 10.4% 59% 3.6% 1.8% -0.1% 3.7% 4.9% 10.1% 1.6% Weighted average 19.4x 19.5x 13% 31% 45% 3.3x 15.7% 3.1x 9.0% 53% 3.4% 1.6% -0.2% 3.1% 3.2% 9.5% -0.4%
Source: Company data, Credit Suisse estimates for covered companies July 2014 18
18
18 July 2014
Global exchanges: Key valuation charts
Figure 18: Price-to-book value (x) versus return on equity (% p.a.) 8.0x PER = 30x Expensive SGX
7.0x PER = 19.8x HKEx NZX
6.0x P P E - = - / - Bursa Malaysia E BV BV
5.0x
MarketAxess Computershare
4.0x Iress
Bovespa Bolsa Mexicana PER = 10x 3.0x Japan Exchange Price Book / Price (P Value BV) / MCX LSE Warsaw Exchange 2.0x ASX
CME ICE Deutsche Boerse 1.0x NASDAQ OMX Toronto Exchange Inexpensive
0.0x 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Return on Equity (% EPS / BV)
Source: Reuters, Company data, Credit Suisse estimates
Figure 19: Price-to-net tangible assets (NTA x) versus return on tangible equity (% p.a.) CBOE 20.0x Expensive
15.0x P P E PER = 19.8x - = - / - Bovespa E NTA NTA
10.0x
NZX SGX Bolsas Y Mercados Bursa Malaysia 5.0x MarketAxess ASX Bolsa Mexicana MCX
Warsaw Exchange Deutsche Boerse Japan Exchange 0.0x
NASDAQ OMX Price Price Net / tangible assets (P NTA) / CME ICE -5.0x
Inexpensive -10.0x -50.0% -30.0% -10.0% 10.0% 30.0% 50.0% 70.0% 90.0% Return on NTA (% EPS / BNTA
Source: Reuters, Company data, Credit Suisse estimates
Asian Exchange Watch 19 18 July 2014
Asian exchanges: Key valuation charts
Figure 20: Asia exchange P/Es highest among all regions Figure 21: With HK & SEA trading on highest P/Es Regional P/E ratios (x) Company P/Es versus global average
40.0x 40.0x
35.0x 35.0x
HKEx 30.0x Asia 30.0x
25.0x 25.0x 20.0x Australia 20.0x 15.0x SGX Nth America 15.0x 10.0x Europe Global average
5.0x 10.0x
Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14
Australia Europe Asia North America SGX HKEx Global average
Figure 22: HKEx’s P/E now above Asian average… Figure 23: …and above the long-term average HKEx P/E relative to Asian exchanges HKEx P/E ratio (x)
40.0x 40.0x
35.0x 35.0x HKEx HKEx Std+1
30.0x 30.0x
Average 25.0x 25.0x
20.0x 20.0x
Asian exchanges Std-1 15.0x 15.0x
10.0x 10.0x
Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Dec-03 Jun-04 Dec-04 Dec-05 Jun-06 Dec-06 Dec-07 Jun-08 Dec-08 Dec-09 Jun-10 Dec-10 Dec-11 Jun-12 Dec-12 Dec-13 Jun-14
Dec-13 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Jun-14
HKEx Average Std Dev +1 Std Dev -1 HKEx Asia
Figure 24: SGX’s valuation is below Asian peers… Figure 25: …and also below medium-term average SGX P/E relative to Asian exchanges SGX P/E ratio (x) 40.0x 35.0x SGX Asian exchanges 35.0x 30.0x
30.0x Std+1 25.0x
25.0x Average
20.0x 20.0x
SGX 15.0x 15.0x Std-1
10.0x 10.0x
Dec-09 Jun-12 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Jun-10 Dec-10 Jun-11 Dec-11 Dec-12 Jun-13 Dec-13 Jun-14
Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14
SGX Average Std Dev +1 Std Dev -1 SGX Asia
Source for all charts: Reuters
Asian Exchange Watch 20 18 July 2014
Asian exchanges: Price performance
Figure 26: Relative to all countries NJA index—US$ Figure 27: Relative to local index 40% 25%
20%
20% 15%
10%
0% 5%
0%
-20% -5% Australia Hong Kong Singapore Malaysia Japan India Australia Hong Kong Singapore Malaysia Japan India
1wk 1mth 1qtr 1wk 1mth 1qtr Figure 28: Absolute performance—US$ Figure 29: Absolute performance—local currency
16% 12%
10% 12% 8%
8% 6%
4% 4% 2%
0% 0%
-2% -4% -4%
-6% -8% Australia Hong Kong Singapore Malaysia Japan India Australia Hong Kong Singapore Malaysia Japan India
1wk 1mth 1qtr 1wk 1mth 1qtr
Figure 30: Local currency performance versus US$ Figure 31: Index performance—US$ 4% 40%
20%
0%
0%
-4% -20% Australia Hong Kong Singapore Malaysia Japan India Australia Hong Kong Singapore Malaysia Japan India
1wk 1mth 1qtr 1wk 1mth 1qtr
Indices used: Asia (All Country NJA Free Float), Australia (S&P/ASX 200), Hong Kong (Hang Seng), Singapore (FTSE Straits Times), Malaysia (KLSE index) and Japan (Nikkei index). Source for all charts: Reuters
Asian Exchange Watch 21 18 July 2014
Australia (ASX.AX): Key market trends
Figure 32: ASX’s ten-year trading value CAGR is +6%… Figure 33: …with June turnover down 6%YoY Value traded (US$ mn) vs. growth (% p.a.) – 1996-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
160,000 200% 160,000 300%
140,000 140,000 250% 150% 120,000 120,000 200% 100% 100,000 100,000 150%
80,000 50% 80,000 100%
60,000 60,000 50% 0% 40,000 40,000 0% -50% 20,000 20,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 34: Velocity below Asian average Figure 35: ADT down 6% year-on-year Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 160% 7,000 150%
140% 6,000 100% 120% 5,000
100% 50% 4,000 80% 3,000 0% 60% 2,000 40% -50% 1,000 20%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 36: Market cap quite volatile Figure 37: Equity trading volumes weakened recently Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 1,800 120% 25,000 140%
1,600 100% 120%
1,400 80% 20,000 100% 60% 1,200 80% 40% 15,000 1,000 60% 20% 800 40% 0% 10,000 600 20% -20%
400 -40% 5,000 0%
200 -60% -20%
0 -80% 0 -40%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 22 18 July 2014
Hong Kong (388.HK): Key market trends
Figure 38: HKEx’s ten-year trading value CAGR is 13%… Figure 39: …with June cash value traded down -18% Value traded (US$ mn) vs. growth (% p.a.) – 1996-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
350,000 200% 350,000 300%
250% 300,000 150% 300,000 200% 250,000 250,000 100% 150% 200,000 200,000 50% 100% 150,000 150,000 50% 0% 100,000 100,000 0% -50% 50,000 50,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 40: Trading velocity below Asian average Figure 41: ADT lower than strong 1Q13 last year Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 160% 16,000 400% 350% 140% 14,000 300% 120% 12,000 250% 10,000 100% 200%
80% 8,000 150% 100% 60% 6,000 50% 40% 4,000 0% 2,000 20% -50%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 42: Market cap up YoY… Figure 43: …with volume growth being negative Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 3,500 140% 25,000 400% 120% 350% 3,000 100% 20,000 300% 80% 2,500 250% 60% 15,000 200% 2,000 40% 150% 20% 1,500 10,000 100% 0% 50% 1,000 -20% -40% 5,000 0% 500 -60% -50%
0 -80% 0 -100%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 23 18 July 2014
Singapore (SGXL.SI): Key market trends
Figure 44: SGX’s ten-year trading value CAGR is 7%… Figure 45: …with June turnover down 35% Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
50,000 200% 50,000 300% 45,000 45,000 250% 150% 40,000 40,000 200% 35,000 35,000 100% 150% 30,000 30,000
25,000 50% 25,000 100%
20,000 20,000 50% 0% 15,000 15,000 0% 10,000 10,000 -50% -50% 5,000 5,000
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 46: Velocity below Asian average Figure 47: June ADT also down 35% YoY Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-12 160% 2,500 350%
140% 300% 2,000 250% 120% 200% 100% 1,500 150% 80% 100% 1,000 60% 50%
40% 500 0% 20% -50%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 48: Market cap up recently… Figure 49: …and equity trades down 30% YoY Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 800 120% 3,000 100% 100% 700 80% 2,500 80% 600 60% 60% 2,000 500 40% 40%
400 20% 1,500 20%
0% 300 0% 1,000 -20% 200 -20% -40% 500 100 -40% -60%
0 -80% 0 -60%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 24 18 July 2014
Malaysia (BMYS.KL): Key market trends
Figure 50: Bursa’s ten-year trading value CAGR is 9%… Figure 51: …June value traded down 21% YoY Value traded (US$ mn) vs. growth (% p.a.) – 1996-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
25,000 200% 20,000 300% 18,000 150% 250% 20,000 16,000 200% 100% 14,000 150% 15,000 12,000 50% 10,000 100% 0% 10,000 8,000 50% -50% 6,000 0% 5,000 4,000 -100% -50% 2,000
0 -150% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 52: Velocity remained lower than Asian peers Figure 53: ADT down 21% YoY in June 2014 Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-12 160% 900 500%
800 140% 400% 700 120% 300% 600 100% 500 200% 80% 400 100% 60% 300 0% 40% 200 -100% 20% 100
0 -200%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 54: Market cap strengthened MoM… Figure 55: …with equity volumes down -13% YoY Market capitalisation (US$ bn) - 2004-12 Volume traded (‘000) and growth (% p.a.) 600 100% 5,000 250% 4,500 80% 500 200% 4,000 60% 3,500 150% 400 40% 3,000 100% 300 20% 2,500 50% 2,000 0% 200 1,500 0% -20% 1,000 100 -40% -50% 500
0 -60% 0 -100%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 25 18 July 2014
China (Shanghai): Key market trends
Figure 56: SSE’s five-year trading value CAGR is 27%… Figure 57: …trading value very volatile across history Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
800,000 200% 800,000 300%
700,000 700,000 250% 150% 600,000 600,000 200% 100% 500,000 500,000 150%
400,000 50% 400,000 100%
300,000 300,000 50% 0% 200,000 200,000 0% -50% 100,000 100,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 58: SSE’s velocity generally higher than Asia peers Figure 59: ADT down 1% YoY in June Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 400% 35,000 1200%
350% 30,000 1000% 300% 25,000 800% 250% 20,000 600% 200%
150% 15,000 400%
100% 10,000 200% 50% 5,000 0% 0%
0 -200%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
-50% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 60: Market cap has flat recently Figure 61: Equity trades down 1% YoY Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 4,000 500% 300,000 600%
3,500 400% 250,000 500% 3,000 400% 300% 200,000 2,500 300% 2,000 200% 150,000 200% 1,500 100% 100,000 100% 1,000 0% 50,000 500 0%
0 -100% 0 -100%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 26 18 July 2014
China (Shenzhen): Key market trends
Figure 62: SZSE’s five-year trading value CAGR is 38%… Figure 63: …trading value very volatile across history Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
600,000 200% 600,000 300%
250% 500,000 150% 500,000 200% 400,000 100% 400,000 150%
300,000 50% 300,000 100%
50% 200,000 0% 200,000 0% 100,000 -50% 100,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 64: SZSE’s velocity significantly higher than peers Figure 65: ADT up 26% YoY Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 700% 30,000 1000%
600% 25,000 800% 500% 20,000 600% 400%
300% 15,000 400%
200% 10,000 200%
100% 5,000 0% 0%
0 -200%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
-100% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 66: Market cap up in the month Figure 67: Equity trades up 20% in June 2014 Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 1,800 400% 200,000 500%
1,600 350% 180,000 400% 1,400 300% 160,000 250% 140,000 1,200 300% 200% 120,000 1,000 150% 100,000 200% 800 100% 80,000 600 100% 50% 60,000
400 0% 40,000 0% 200 -50% 20,000
0 -100% 0 -100%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 27 18 July 2014
Japan (Tokyo) (8697.T): Key market trends
Figure 68: TSE’s ten-year trading value CAGR is 6%… Figure 69: …value traded down 15% YoY in the month Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
900,000 200% 900,000 300%
800,000 800,000 250% 150% 700,000 700,000 200% 600,000 100% 600,000 150% 500,000 500,000 50% 100% 400,000 400,000 50% 300,000 0% 300,000 0% 200,000 200,000 -50% 100,000 100,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 70: Trading velocity now well above Asian peers Figure 71: June 2014 ADT down 15% YoY Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 300% 35,000 250%
30,000 200% 250%
25,000 150% 200% 20,000 100% 150% 15,000 50%
100% 10,000 0%
50% 5,000 -50%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 72: Market cap quite stable after 2009 Figure 73: Equity trade volume down 6% in June Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 5,000 100% 80,000 140% 4,500 120% 80% 70,000 4,000 100% 60% 60,000 3,500 80% 40% 50,000 3,000 60%
2,500 20% 40,000 40%
2,000 20% 0% 30,000 1,500 0% -20% 20,000 1,000 -20% -40% 10,000 500 -40%
0 -60% 0 -60%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 28 18 July 2014
Korea: Key market trends
Figure 74: KRX’s ten-year trading value CAGR is 9%… Figure 75: …with June 14 growth flat YoY Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
300,000 200% 300,000 300%
250% 250,000 150% 250,000 200% 200,000 100% 200,000 150%
150,000 50% 150,000 100%
50% 100,000 0% 100,000 0% 50,000 -50% 50,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 76: Trading velocity above Asian peers Figure 77: ADT flat in the month Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 400% 12,000 350%
350% 300% 10,000 250% 300% 8,000 200% 250% 150% 200% 6,000 100% 150% 4,000 50%
100% 0% 2,000 50% -50%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
0% Jan 04
Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 78: Market cap up in the month… Figure 79: …with equity trades up 3% YoY Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% p.a.) 1,400 120% 140,000 100% 100% 1,200 120,000 80% 80% 60% 1,000 60% 100,000 40% 40% 800 80,000 20% 20% 600 60,000 0% 0% 400 -20% 40,000 -20% -40% 200 20,000 -40% -60%
0 -80% 0 -60%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 29 18 July 2014
India (NSE): Key market trends
Figure 80: NSE’s five-year trading value CAGR is *-4%… Figure 81: …with June 2014 turnover up 101% YoY Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
140,000 200% 140,000 300%
250% 120,000 150% 120,000 200% 100,000 100,000 100% 150% 80,000 80,000 50% 100% 60,000 60,000 50% 0% 40,000 40,000 0% -50% 20,000 20,000 -50%
0 -100% 0 -100%
Jan 06 Jan 08 Jul 10 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 82: Trading velocity below Asian peers Figure 83: ADT up 101% YoY in the month Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 180% 6,000 700%
160% 600% 5,000 140% 500% 120% 4,000 400% 100%
80% 3,000 300%
60% 200% 2,000 40% 100% 20% 1,000 0% 0%
0 -100%
Jan 09 Jan 13 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 14
-20% Jan 04
Jan 99 Jan 96 Jan 97 Jan 98 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 84: Market cap growth up recently… Figure 85: …with equity trades being quite volatile Market capitalisation (US$ bn) – 2004-14 Volume traded (‘000) and growth (% pa) 1,800 600% 200,000 120%
1,600 180,000 500% 100% 1,400 160,000 80% 400% 140,000 1,200 60% 120,000 1,000 300% 100,000 40% 800 200% 80,000 20% 600 100% 60,000 0% 400 40,000 0% -20% 200 20,000
0 -100% 0 -40%
Jan 08 Jul 11 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 30 18 July 2014
India (Mumbai): Key market trends
Figure 86: BSE’s five-year trading value CAGR is -2%… Figure 87: …with June-14 growth being up 129% YoY Value traded (US$ mn) vs. growth (% p.a.) – 2000-14 Value traded (US$ mn) vs. growth (% p.a.) – 2005-14
50,000 200% 50,000 300%
45,000 45,000 250% 150% 40,000 40,000 200% 35,000 100% 35,000 150% 30,000 30,000 50% 100% 25,000 25,000 0% 50% 20,000 20,000 0% 15,000 -50% 15,000 10,000 10,000 -50% -100% 5,000 5,000 -100%
0 -150% 0 -150%
Jan 09 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jul 08 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Value (US$mn) Growth (%pa) - RHS 10yr CAGR (%pa) Value (US$mn) Growth (%pa) - RHS 5yr CAGR (%pa) Figure 88: Trading velocity well below Asian peers Figure 89: ADT up 129% YoY in the month Velocity (turnover / market capitalisation % p.a.) Average daily value traded (US$'000) and growth (% p.a.) – 2004-14 160% 2,500 150%
140% 100% 2,000 120%
100% 50% 1,500 80% 0% 60% 1,000 40% -50%
20% 500 -100% 0%
0 -150%
Jul 13 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jan 14
-20% Jan 09
Jan 09 Jan 08 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14
Average value (US$'000) Growth (%pa) Velocity Velocity (6mth ma) Asia average Figure 90: Market cap up… Figure 91: …with equity trades rising 60% YoY Market capitalisation (US$ bn) - 2004–14 Volume traded (‘000) and growth (% p.a.) 1,800 150% 70,000 80%
1,600 60% 60,000 1,400 100% 40% 50,000 20% 1,200 50% 0% 1,000 40,000 -20% 800 30,000 0% -40% 600 20,000 -60% 400 -50% -80% 10,000 200 -100%
0 -100% 0 -120%
Jan 11 Jul 12 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jul 11 Jan 12 Jan 13 Jul 13 Jan 14
Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Mkt cap (US$bn) Growth (%pa) volunms ('000) Growth (%pa) Source for all charts: World Federation of Exchanges (WFE), Credit Suisse estimates
Asian Exchange Watch 31 18 July 2014
Companies Mentioned (Price as of 17-Jul-2014) ASX (ASX.AX, A$36.22) BM&F Bovespa SA (BVMF3.SA, R$12.21) Bolsa Mexicana de Valores (BOLSAA.MX, $27.64) Bolsas Y Mercados Espanoles (BME.MC, €32.85) Bursa Malaysia (BMYS.KL, RM8.19) CME Group Inc. (CME.OQ, $71.13) Cetip (CTIP3.SA, R$31.38) Commonwealth Bank Australia (CBA.AX, A$81.21) Computershare (CPU.AX, A$12.6) Deutsche Boerse (DB1Gn.F, €54.02) Dubai Financial Market (DFM.DU, Dhs3.6) Everbright Securities (601788.SS, Rmb8.11) GPW (GPW.WA, zł36.92) HSBC Holdings (0005.HK, HK$79.8) Helex (EXCr.AT, €7.75) Hong Kong Exchanges and Clearing (0388.HK, HK$153.6) ICAP Plc (IAP.L, 353.7p) IRESS (IRE.AX, A$8.6) Industrial & Commercial Bank of China (1398.HK, HK$4.97) IntercontinentalExchange, Inc. (ICE.N, $191.22) JSE (JSEJ.J, R97.04) Japan Exchange Group (8697.T, ¥2,424) London Stock Exchange (LSE.L, 1950.0p) Macquarie Group (MQG.AX, A$59.72) MarketAxess (MKTX.OQ, $48.58) Moscow Exchange (MOEX.MM, Rbl61.49) Multi Commodity Exchange of India (MCEI.BO, Rs794.1) NASDAQ OMX Group Inc. (NDAQ.OQ, $40.61) NYSE Euronext (NYX.N, $45.29) NZX (NZX.NZ, NZ$1.32) PH Stock Exchan (PSE.PS, P279.0) Sina Corporation (SINA.OQ, $46.55) Singapore Exchange (SGXL.SI, S$6.97) Standard Chartered Plc (2888.HK, HK$161.3) TMX Group (X.TO, C$57.01) Tosho (8920.T, ¥2,021)
First NZ Capital Disclosure Appendix Important Global Disclosures The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including FNZC's total revenues, a portion of which are generated by FNZC's investment banking activities. As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10- 15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, First NZ Capital's policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.
Asian Exchange Watch 32 18 July 2014
First NZ Capital's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 33% (39% banking clients) Neutral/Hold* 38% (48% banking clients) Underperform/Sell* 29% (31% banking clients) Restricted 0% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. First NZ Capital ...... Gregory Main
First NZ Capital’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. First NZ Capital's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to First NZ Capital's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html First NZ Capital does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.
Asian Exchange Watch 33 18 July 2014 Credit Suisse Disclosure Appendix Important Global Disclosures Arjan van Veen, David Bailey and Anantha Narayan each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant se ctor, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10- 15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total re turn relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 44% (54% banking clients) Neutral/Hold* 40% (50% banking clients) Underperform/Sell* 13% (47% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names
Asian Exchange Watch 34 18 July 2014
The subject company (CME.OQ, CTIP3.SA, DB1Gn.F, IAP.L, ICE.N, MKTX.OQ, MOEX.MM, NDAQ.OQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (MOEX.MM) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (DB1Gn.F, IAP.L, ICE.N, MKTX.OQ, NDAQ.OQ) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (MOEX.MM) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (MOEX.MM) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BOLSAA.MX, BME.MC, CME.OQ, CTIP3.SA, MOEX.MM, NDAQ.OQ) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (DB1Gn.F, IAP.L, ICE.N, MKTX.OQ, NDAQ.OQ) within the past 12 months As of the date of this report, Credit Suisse makes a market in the following subject companies (CME.OQ, ICE.N, MKTX.OQ, NDAQ.OQ). As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (MOEX.MM). Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (BVMF3.SA, BOLSAA.MX, BME.MC, CME.OQ, CTIP3.SA, CPU.AX, DB1Gn.F, IAP.L, IRE.AX, ICE.N, MKTX.OQ, MOEX.MM, NDAQ.OQ) within the past 12 months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. The following disclosed European company/ies have estimates that comply with IFRS: (DB1Gn.F, IAP.L). As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse Securities (Japan) Limited ...... Takehito Yamanaka ; Ryota Muranaka Credit Suisse (Hong Kong) Limited ...... Arjan van Veen Credit Suisse Securities (India) Private Limited ...... Anantha Narayan Credit Suisse Equities (Australia) Limited ...... David Bailey ; Andrew Adams ; James Cordukes, CFA
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