SGX profit drops 7% on sluggish derivatives trading
CEO Loh 'open' to partnerships with other bourses if strategy matches
MAYUKO TANI, Nikkei staff writer
SINGAPORE -- Singapore Exchange announced Thursday that net profit for the January-March quarter fell 7% on the year to 83.1 million Singapore dollars ($59 million), blaming the sluggish derivatives market for the lower-than-expected profit.
Mentioning potential tie-ups with other stock exchanges, Chief Executive Loh Boon Chye said "we are open, and will review partnerships if it adds to our strategy of being a multi-asset exchange across different jurisdictions, and if it complements our strategy of improving cash markets ... and diversifying our revenue streams across different asset classes."
Bloomberg reported in March that the exchange, known as SGX, was talking with other bourses, including Nasdaq and CME Group, for partnerships which may lead to the sale of shares or a full merger.
In the March quarter, the derivatives market segment saw revenue decline 9% on the year to S$75.2 million. The drop was because of strong derivatives trading in the corresponding quarter in 2016, when a sell-off of Chinese stocks sparked volatility in global equity markets.
The equity market fared better in the January-March quarter. Revenue in the equities and fixed income market segment increased 1% on the year to S$103.1 million, boosted by positive momentum spreading from the U.S. after the presidential election last November. Daily average trading volumes in the securities market rose 1% to reach the highest level since the first quarter of 2013. However, this was not strong enough to cover the decline in the derivatives segment.
A S$4 million loss from the sale of SGX's stake in the Bombay Stock Exchange weighed on the bottom line.
Loh nevertheless was upbeat, describing the results as "robust" at a press conference on Thursday evening. Stock market participation increased among both retail and institutional investors, he noted. Looking ahead, he said: "We will continue to widen and deepen our suite of products and services, to enhance our position as an offshore investment, trading and risk management center."