The Singaporean bourse, known as SGX, operates various businesses from equities to currencies, commodities to indexes.
The July-December results – its financial year starts in July – marked the second straight period of profit decline.
Total revenue for the six months through December was S$521 million, up 0.2% on the year, while the operating expenses for the half-year increased 8% to S$215 million due to higher costs for staff and technology.
Notably, its core equities business revenue declined 4.7% due to weaker trading activities.
The total trading value of cash equities for the six months was S$150 billion, down 7% from S$161 billion a year ago, while total traded volume dropped 29% to S$159 billion.
Speaking at an online briefing on Friday, SGX CEO Loh Boon Chye noted that the bourse welcomed the listing of its first three special purpose acquisition companies (SPACs) last month – Vertex Technology Acquisition, Pegasus Asia and Novo Tellus Alpha Acquisition – which collectively raised over S$500 million in their initial public offerings.
“We look forward to the subsequent business combinations (between the SPACs and target companies), which will introduce more businesses in the new economy sectors and provide investors with wider choices,” he said.
The exchange hopes that SPACs, which provide a faster path to a public listing for start-ups, will convince more of Southeast Asia’s tech start-ups to consider Singapore as a listing venue.
Loh said that such business combinations could result in a company with a market capitalisation of between S$500 million and S$2 billion and that the exchange could expect high trading volume from new economy businesses, which could contribute to SGX’s revenue beyond the listing fees.
“Clearly, the trading volume is what we hope (for), given these expanded investment choices.”
Local brokerage UOB Kay Hian said in a recent report that the new SPAC listings “may help stem the overall decline” of SGX’s equity business revenues in the current fiscal year, depending on the success of SPAC listings and business combinations.
While the equity business declined, SGX’s other businesses grew during the six months.
Commodities derivatives volumes increased 17% to 14.1 million contracts and currency derivatives volume increased 6% to 12.6 million contracts, leading to a 16% increase in revenue in the commodities and currency segment.
“Looking forward, we anticipate inflationary pressures and interest rates to rise as Asian economies recover. This could lead to higher demand for portfolio risk management solutions and access to growing Asian markets,” SGX said in its financial statement, adding that its treasury income will also recover with rising interest rates.
Singapore Exchange reported the half-year results after the trading ended today.
Its share price was down 0.2% on the day.