SINGAPORE: Singapore Exchange’s net profit fell 16% year on year to 83 million Singapore dollars ($60 million) for the first quarter ended in September, as both stock and derivatives trading took a beating from investors electing to stay on the sidelines.
The sluggish market environment may persist. The weak global economy and uncertainties related to issues such as the U.S. presidential election and an expected rate hike there “could also potentially lead to a period of relatively subdued trading volumes, if participants decide to adopt a more cautious approach,” CEO Loh Boon Chye warned at a press conference Wednesday evening.
Revenue declined 13% to S$190 million. Revenue from the securities market went down 9% year on year, as average daily trading value slid 19% on the back of economic and political uncertainties.
Derivatives market revenue plunged 22% due to weakness in important contracts. Trading volume of China A50 index futures tumbled 44% year on year and Nikkei 225 index futures dove 30%. The exchange blamed extraordinarily active trading volume during the year-earlier quarter for the comparative weakness. “It is in line with the drop in the [underlying] markets” in China and Japan, Michael Syn, head of derivatives trading, said.
“We will continue to be disciplined about costs while investing to grow our business and be more competitive,” Loh said in the earnings release.
Singapore Exchange is working on introducing a dual-class share system, in which minority shareholders, typically company founders who want to keep management control after selling shares in initial public offerings, are allowed to have majority voting rights. SGX is holding a roundtable discussion with experts in November, followed by one to two months of public consultation before making a final decision. The exchange expects the setup to attract emerging digital companies.
