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Singapore Exchange 4Q Net Income Climbs 43% on Futures

July 23 (Bloomberg) -- Singapore Exchange Ltd., operator of Southeast Asia’s biggest stock market, said fiscal fourth-quarter profit rose 43 percent as trading of derivative contracts climbed to a record and stock volumes rebounded.

Net income increased to S$87.6 million ($69.2 million) in the three months ended June 30, compared with S$61.1 million a year ago, the company said in a statement today. That’s lower than the S$92 million average estimate by six analysts in a Bloomberg News survey.

“This is our best performance since fiscal year 2008,” Chief Executive Officer Magnus Bocker said in the statement. “Our continuing investments in new products and wider distribution enabled us to benefit from increased market activities.”

Average daily derivative transactions jumped 77 percent to 556,728 contracts in June, a new monthly record, according to the SGX. Renewed interest in Japanese shares made the bourse the No. 1 venue for trading Nikkei 225 Stock Average futures.

Operating revenue increased 28 percent to S$202.3 million from a year earlier, the SGX said. Contributions from equities trading rose 40 percent, while those for derivatives climbed 35 percent, it said.

More than 4.5 million Nikkei 225 futures traded in Singapore in June, compared with 3.6 million Nikkei 225 futures in Osaka and 1.6 million in Chicago, according to data from the three bourse operators compiled by Bloomberg. The Japanese bourse has kept a bigger share of the mini Nikkei 225 futures, whose contract size is about five times smaller than those offered in Singapore and Chicago, based on the data.

Japan Rally

The derivatives business benefited from a rally in Japanese equities from last November, SGX Chief Financial Officer Chng Lay Chew said in April. Japanese index futures contracts have become Singapore’s most actively traded, as Prime Minister Shinzo Abe’s reforms have spurred equities. Japan’s broader Topix index capped its biggest rally over three quarters in more than 30 years on June 30.

The average daily value of stocks traded on the SGX increased 45 percent to S$1.6 billion in the April-June quarter from a year earlier, according to data compiled by Bloomberg. Singapore’s benchmark Straits Times Index fell 4.8 percent in the three months to June 30 on concern the Federal Reserve will soon taper monetary stimulus.

Companies raised about S$1.9 billion from initial public offerings in Singapore during the quarter, compared with S$36.1 million a year ago, according to data compiled by Bloomberg. Real estate and business trusts were the biggest fundraisers in the city in the past year, accounting for $4.6 billion of the $5.3 billion, the data show.

Shopping mall trusts owned by Singapore Press Holdings Ltd. and Overseas Union Enterprise Ltd. are both set to list this week.

“The need for capital raising and risk management remains robust in Asia despite uncertain global economic conditions,” the SGX said in the statement. “We will continue to develop new products and services, and strengthen our regulatory and risk management capabilities.”

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

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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