Singapore Exchange Third-Quarter Profit Declines 22%

Singapore Exchange Ltd. (SGX), the operator of Southeast Asia’s biggest equities bourse, said third-quarter profit fell 22 percent from a year earlier as equities trading volumes shrank following a penny-stock rout.

Profit dropped to S$75.8 million ($60.3 million) in the three months ended March 31 from S$97.67 million a year earlier, the company known as SGX said in a statement today. An average S$71.8 million profit was forecast in a Bloomberg News survey of four analysts. Operating revenue slid 13 percent from a year earlier to S$165.6 million, the statement shows.

The exchange’s second straight decline in quarterly profit came as trading volumes decreased after a slump in the share prices of three commodity companies erased $6.9 billion in market value over three days in October. Stock trading on the Singapore bourse dropped 37 percent to a daily average of S$1.08 billion in the three months through March 31 from a year earlier, after falling 20 percent in the previous quarter, according to data compiled by Bloomberg.

“The persistently weak securities activity levels continue to pose a near-term headwind for SGX,” Benjamin Ong, an analyst at Phillip Securities Pte, said in a note before the results. “The penny-stock saga together with the proposed regulatory changes would dampen retail interest in the near term.”

Regulatory Changes

The Monetary Authority of Singapore and SGX in February proposed changes including requiring collateral for some transactions and shortening the settlement period for stock trades. The bourse also introduced circuit breakers in the same month to minimize trading volatility.

“We’re confident that our securities market will recover over time and we remain committed to our long-term growth strategies,” the exchange operator said in a statement. “We will continue to launch new products, expand international distribution and strengthen our regulatory and risk management capabilities.”

Apart from proposing regulatory changes, the MAS and the white-collar crime unit of the Singapore police this month started investigating possible stock-trading irregularities in Blumont Group Ltd., Asiasons Capital Ltd. and LionGold Corp. Banks and brokers including Goldman Sachs Group Inc. and Royal Bank of Canada have sued clients to recover money owed by customers after the October stock rout.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Yee Kai Pin

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