The SGX today reported a full-year net profit of S$451.4 million (US$326 million), up just around 1% from its 2021 record, amid uncertain market conditions as sell-offs in Asian equities over the course of recent months keep investors jittery on the back of high inflation across countries.
For its latest financial year ended June 30, the exchange’s revenue derived from equities, which made up 64% of total takings, fell slightly to S$698.9 million from S$701.1 million, even as it worked to diversify its offerings across multiple asset classes.
SGX cited shocks to the global economy in its earnings report, from higher-than-expected inflation globally and a worse-than-anticipated slowdown in China, to further negative spillovers from Russia’s invasion of Ukraine this year.
It said it expects to see activities on portfolio risk management increase in tandem with the increasing downside risks from worldwide economic conditions. At the same time, the Singapore bourse has moved to grow tie-ups with its peers in the US and South Asia.
Last month, SGX announced a dual-listing collaboration with the New York Stock Exchange, allowing issuers to tap into pools of capital in either market outside of their home regions.
The agreement also lets the two bourses develop new products and services in support of listed companies and investors in both locales, and coordinate compliance efforts for dual-listed companies. SGX already has a dual-listing arrangement with Nasdaq.
“It can work both ways — for companies that are listed in the US that may want to expand into this part of the world, and for…companies in this part of the world, listing on SGX and at the same time on a US exchange,” SGX’s chief executive officer Loh Boon Chye said at an earnings conference on Thursday.
Major unicorn startups based in Singapore like the superapp developer Grab and the e-commerce and gaming giant Sea have looked past the city-state to the US in becoming publicly listed companies, raising scrutiny over their home country’s attractiveness as a capital-raising destination for high-flying technology companies.
Market talk has swirled around prompting these tech upstarts to consider a dual listing on SGX, but the bourse’s CEO refused to be drawn into speculating on such prospects when asked about it on Thursday.
“We wouldn’t clearly comment on the specific companies,” he said. “Clearly, the [SGX] platform does create value for companies that they see, so companies will have to make their necessary choices.”
Beyond America, the Singapore bourse last month also launched a connection with the National Stock Exchange of India to trade and clear equity derivatives, where orders from SGX’s trading members can be routed to the Indian bourse’s international financial services center for trading and execution.
The equity research arm of Singapore lender Oversea-Chinese Banking Corp assessed in a report last month that weaker-than-expected trading volumes and activities due to lower risk appetite and market liquidity were headwinds for the bourse, but noted that market debate on dual-listing possibilities over the medium term had also been refreshed, which could give a boost to Singapore’s cash securities market via SGX.
“Over the medium term, the firm is expected to focus on executing its core strategies to advance its multi-asset exchange platform, widen its partnerships and network and grow its international presence, which bodes positively for future earnings streams,” the report said.