Singapore Exchange Ltd. climbed the most in more than a month after the city’s bourse operator said third-quarter net income rose 16 percent as it reduced expenses and improved trading of derivatives.
Profit in the three months ended March 31 increased to S$77.8 million ($62.2 million), or 7.25 cents a share, from S$67 million, or 6.26 cents a year earlier. That’s higher than the average estimate of S$76.6 million by five analysts compiled by Bloomberg. Operating revenue declined 3.1 percent to S$163.6 million from S$168.8 million.
Global stocks posted their best quarter in 1 ½ years as the MSCI World Index surged 11 percent in the three months ended March, amid signs of growing investor confidence in corporate profits. Singapore’s benchmark Straits Times Index climbed 14 percent, the most since the quarter ended September 2009.
“While we continue to deem SGX’s solid longer-term growth prospects as a regional hub, we highlight that the nearer term fortunes of the stock are more market-volume related,” Arjan van Veen, a Credit Suisse Group AG analyst who has a hold rating for the stock, said in a report today.
The stock advanced 1.5 percent to S$6.82 at the close in Singapore, the biggest gain since March 14.
“Market volumes will continue to be primarily driven by global economic forces,” the company said in a stock exchange statement yesterday. “We see growing interest from Singapore and international companies to seek a listing on SGX.”
Civmec Ltd., whose initial public offering was 2.1 times subscribed, climbed 39 percent when it started trading on April 13. Bumitama Agri Ltd., whose stock sale was 30.8 times subscribed, jumped 31 percent on its debut the day before, prompting SGX Chief Executive Officer Magnus Bocker to say the exchange received the highest response to a Singapore share sale in the past five years.
“One area of excitement was a strong IPO pipeline, which according to management, could see billion-dollar listings over the next one to two quarters,” Anand Pathmakanthan, an analyst at Nomura Equity Research, who has the equivalent of a hold rating on the stock, said in a report yesterday.
SGX has a “strong pipeline” of companies from China, Southeast Asia, India and Europe seeking to raise funds on the exchange from share sales, according to a slide presentation yesterday.
CVC Capital Partners Ltd. may seek more than $2 billion from an initial public offering of the Formula One auto-racing series, according to four people with knowledge of the matter. The private equity firm may sell a stake of about 20 percent in Formula One, one person said last week, asking not to be identified as the information is private.
CVC wants to conduct the sale in Singapore as early as June, though its plans aren’t final, the people said.
Appointed in December 2009, Bocker has been trying to boost equities trading with the introduction of the world’s fastest order processor in August and by scrapping the lunch trading break in the city-state. His most ambitious plan, the A$8.3 billion ($8.6 billion) takeover bid for ASX Ltd., was blocked by the Australian government last year.
The company’s expenses dropped 5.9 percent to S$70.6 million in the quarter, driven by a 10 percent decline in technology costs, according to the statement. Credit Suisse said the decrease in expenses was a “key stand out” in the results.