Published October 16, 2008
SGX quarterly profit slides 35%
Derivatives to remain bright spot for SGX amid market meltdown: analysts
By JAMIE LEE

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THE Singapore Exchange (SGX) yesterday reported a 35 per cent plunge in quarterly earnings, which did not surprise analysts, given the recent market rout. SGX posted a net profit of $84.5 million for the first quarter of fiscal 2009, compared with $130 million previously. Securities market revenue was nearly halved to $74.4 million from $141.2 million registered a year ago. The daily average trading value for the three months ended Sept 30 slumped 51 per cent to $1.27 billion.
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Financial statements
The number of new IPOs also tumbled to 10 issues worth about $300 million from 21 IPOs that raised $1.9 billion a year ago. But SGX continued to see growth in the derivatives segment. Net derivatives clearing revenue rose 23.6 per cent to $46.1 million. This was thanks to a near 40 per cent jump in the futures trading volume to 17.4 million contracts compared with 12.5 million contracts in the same period a year ago. The company has also declared an interim base dividend of 3.5 cents per share on a tax exempt one-tier basis.
'Notwithstanding the current turbulence in global financial markets, SGX business remains robust and profitable, bolstered by derivatives trading,' said chief executive Hsieh Fu Hua yesterday.
'SGX continues to be vigilant and stands ready to maintain the integrity and orderliness of its markets, while actively managing its clearing risk exposure,' added Mr Hsieh, who is expected to step down from his post next year.
SGX's first-quarter results were in line with expectations, analysts told BT, adding that derivatives revenue is likely to remain as the one bright spot amid the stock market meltdown.
'This is the saving grace for the entire revenue stream,' said DBS analyst Lim Sue Lin. 'It is building up very well on a year-on-year basis.'
She added that Mr Hsieh's expected departure is unlikely to introduce significant changes to the management of the bourse. 'I don't think there's going to be a big change in the direction,' she said.