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SGX Q4 earnings decline, but trading volume expected to recover

Singapore Exchange (SGX) posted a 11.6 per cent year-on-year decline in fiscal fourth-quarter earnings - the third straight quarter of decline. 

SINGAPORE: Singapore Exchange (SGX) has posted an 11.6 per cent year-on-year decline in fiscal fourth-quarter earnings. Net profit for the three months ended in June came in at S$77 million. This is the third straight quarter of decline, as weaker securities business put a drag on earnings.

Meanwhile, operating revenue was S$173 million, down by 14.7 per cent from the previous year. But SGX says it expects share trading volume to recover.

"We expect the securities market to come back and to become more liquid and deeper as the securities market in Singapore should be,” said SGX CEO Magnus Bocker. “We expect a normalisation of both the volatility, and we will see more of the participation that we have seen leaving the marketing coming back and continue to invest and trade in our market."

SGX adds that securities daily average traded value fell by 23 per cent year-on-year to S$1.14 billion during the last fiscal year. This was largely due to record low market volatility, fund outflows and a lower short-term speculative interest from lower-priced stocks.

However, it was a record year for its derivatives business, with 104 million contracts traded. In terms of initial public offerings (IPOs), there were 34 new listings which raised S$4.8 billion in the last financial year, compared to 30 listings raising S$8.1 billion a year ago.

"We have seen six IPOs in July; we have a nice pipeline also lining up for August,” said Mr Bocker. “And we had a stronger pipeline at the end of June, compared to a year ago, so the interest for IPOs is there."

For the full year, SGX booked a 4.6 per cent on-year drop in net profit at S$320 million, while operating revenue fell 4 per cent to S$687 million. Looking ahead to FY 2015, the exchange expects operating expenses to come in at between S$330 million and S$340 million, while technology-related capital expenditure is expected at between S$50 and S$55 million.  

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