SGX shares fall 6% after 20.5% drop in second-half profit

SINGAPORE – Shares of the Singapore Exchange (SGX) fell sharply on Thursday (Aug 5) after the company reported a 20.5 per cent drop in earnings for the second half of the financial year, despite assurances that its growth potential remains intact.

Net profit for the six months ended June 30 came in at $205.6 million, down from $258.6 million in the prior-year period, the SGX announced before the market opened on Thursday.

Second-half operating revenue fell 6.8 per cent from a year ago to $535.1 million, with the decline coming from its equities segment.

The board proposed a final quarterly dividend of eight cents per share, bringing total dividends for the financial year to 32 cents, up from 30.5 cents the previous year.

SGX shares closed at $11.33, down 72 cents, or 6 per cent, following the earnings announcement.

The SGX’s full-year net profit declined 5.6 per cent to $445.4 million, although revenue of $1.06 billion was comparable with last year’s level.

It said total expenses increased 8 per cent to $525.2 million due largely to the consolidation of expenses relating to index provider Scientific Beta and foreign currency trading platform BidFX.

During the year, revenue from the fixed income, currencies and commodities (FICC) business increased by 24 per cent to $211.8 million. This was due mainly to an increase in foreign currency trading following the acquisition of BidFX, the SGX said.

It also helped to offset a fall in fixed income listings. There were 795 bond listings raising $389.1 billion during the year, compared with 1,032 bond listings raising $452.1 billion a year earlier.

The FICC business accounted for 20 per cent of total revenues during the financial year, up from 16 per cent the year before.

The SGX’s core equities business, comprising cash and derivatives, declined, however, and now accounts for 66 per cent of total revenue compared with 72 per cent a year before.

There were a total of 11 new equity listings, including that of NanoFilm Technologies, which is up by more than 113 per cent since its initial public offering in October 2020.

Daily average traded value for cash equities increased 2 per cent to $1.4 billion during the year, resulting in a 2 per cent increase in total traded value to $340.1 billion, the SGX said. However, derivatives volumes declined 6 per cent to 181.2 million contracts during the year.

SGX chief executive Loh Boon Chye said that as a whole, the bourse performed strongly during the 2021 financial year. He added that the company is well positioned and making progress in establishing itself as Asia’s top multi-asset exchange.

To grow earnings, the SGX will strive to meet diverse capital raising needs. It is now in the process of working with regulators to list special purpose acquisition companies (Spacs) in Singapore following the completion of a consultation in June, Mr Loh said.

Meanwhile, more exchange-traded fund (ETF) listings are in the pipeline, following a “record year for ETFs with assets under management nearing $10 billion”.

Mr Loh added that the SGX is aiming to become Asia’s largest integrated foreign exchange platform and has made progress on this front following the acquisition of MaxxTrader last month. It will also focus on raising Asian bond trading volumes and climate-related offerings.