SGX Q2 results hit by slight drop amid weak market

SINGAPORE - Singapore Exchange reported a slight drop in earnings for the three months to Dec 31, as the bourse weathered the weak market sentiment and reduced activities in the quarter.

For the October-December period, SGX's net profit pared 3 per cent year-on-year to S$83.7 million on the back of a S$194.6 million revenue, which was largely unchanged from S$195.1 million from a year ago.

"Securities revenue decreased S$5.1 million or 10 per cent to S$46.6 million and accounted for 24 per cent of total revenue, due to decline in market activities," SGX said in its results announcement after market close on Wednesday (Jan 20).

The Asian equity markets waded through some choppy waters in the second half last year as investors were spooked away by the bearish mood in China and the uncertain growth outlook for the region.

As a result, the securities daily average traded value dropped 11 per cent to S$930 million and total traded value decreased 9 per cent to S$59.5 billion in the quarter, SGX added.

But the derivatives business - which accounted for 40 per cent of SGX's revenue - fared better, with revenue up 1 per cent year-on-year to S$77.6 million.

The global commodities benchmarks were a particular highlight, led by a 121 per cent rise in iron ore volumes to 2.6 million contracts.

Total earnings per share were down 3 per cent to 7.8 cents and net asset value stood at 82.5 cents a share as of Dec 31.

An interim dividend of 5 cents per share was declared, to be paid on Feb 4 this year.

Chief executive Loh Boon Chye noted that despite the near term weakness, SGX's half year earnings were strong.

"It was a challenging quarter with persistent weak market sentiment… But our net profit for first half of financial year 2016 improved by 11 per cent to S$183 million, on the back of a strong quarter," he said, referring to the three months to Sept 30 when SGX had its best quarterly results in seven years.

The bourse continued to see results in its bid to diversify business mix, with market data and connectivity revenue up 8 per cent year-on-year in the period while depository services revenue rose 14 per cent.

In the face of yet more market uncertainties this year, SGX will focus on cost management. Operating expenses for the year are now expected to be S$415 million to S$425 million, trimmed from the previous range of S$425 million to S$435 million.