Solid Performance For SGX In Choppy Conditions
Thursday, January 19, 2012

Despite recording lower securities trading volumes, the Singapore Stock Exchange (SGX) announced an increase in profits for the six months ending December 31, 2011, after expanding its product range to capture more business.

SGX recorded revenue of SGD148.1m, net profit of SGD65.4m (SGD74.2m) and earnings per share of 6.1 cents in the second quarter of the current financial year, which runs from July 1 to June 30. This brings SGX’s net profit to SGD152.9m for the six months ended December 31, 2011, 3% higher than last financial year’s SGD148.4m. The Board of Directors has declared an interim dividend of 4.0 cents per share, payable on February 14, 2012.

However, the exchange said that investor sentiment was affected by macroeconomic uncertainty and this led to lower securities trading volumes. Securities daily average trading value was SGD1.1bn in the second quarter of the 2012 financial year (SGD1.8bn in Q2 2011) and SGD1.4bn in the first half (SGD1.7bn in H1 2011) respectively.

Price volatility, on the other hand, led to increased risk management activities by existing and new customers in the derivatives market. Derivatives daily average trading volume (DAV) was up 11% to 274,757 contracts (248,325 contracts in Q2 2011) with market share of key contracts remaining steady. DAV for H1 2012 was 22% higher at 298,796 contracts (245,025 contracts in H1 2011). After-hours trading contributed 16% (14% in H1 2011) of the overall volume this quarter.

Chinese A50 futures DAV doubled year-on-year to 16,959 contracts and was 36% higher quarter-on-quarter. Year-on-year DAV of Nikkei options rose 39% to 10,202 contracts and Rubber futures were up 24% to 1,118 contracts. The average monthly open interest of derivatives grew 44% year-on-year to 1,346,544 contracts.

There were nine new listings in the second quarter including Lonza Group (the SGX's first Swiss listing) and CMNC Goldmine. A total of SGD2.4bn (SGD7.3bn) of equity funds was raised: SGD214.7m in IPO funds and SGD2.2bn in secondary fund raising. In addition, SGD19bn was raised through 35 new bond issues.

Magnus Bocker, SGX CEO, said: “SGX reported a net profit of SGD65.4m in difficult market conditions following a decline in securities turnover. We continue to expand our products and services, including the start of the world’s first clearing of OTC Foreign Exchange Forwards. We also welcomed our first Catalist mineral, oil and gas listing. During the quarter, we effectively transferred customers’ positions and margins following the collapse of MF Global. This demonstrates the importance of a strong and capable clearing house. We remain cautious and focused on cost discipline amid global economic challenges.”

The SGX expanded its range of investment products in Q2 by listing six new exchange-traded funds and adding 15 Depository Receipts to its GlobalQuote platform. The exchange is also working on the ASEAN (Association of South East Asian Nations) Trading Link, under the auspices of the ASEAN Exchange collaboration, to collectively promote ASEAN as a highly investable asset class.