SGX Reports Growth and Outlines Multi-Asset Strategy

Singapore Exchange (SGX) has reported strong financial results for the fiscal year 2024, showcasing a commitment to expanding its derivatives and multi-asset strategies. The Group’s revenue increased by 3.1% to S$1.23 billion, primarily driven by significant growth in the currencies and commodities sectors. Earnings rose by 4.5% to S$526 million, even as capital raising activities in cash equity markets were muted. SGX also announced investments in infrastructure and a solid balance sheet, along with a proposed final quarterly dividend of $0.09 per share, reflecting an annualized increase of nearly 6%.

### Key Takeaways
– Group revenue grew by 3.1% to S$1.23 billion.
– Earnings increased by 4.5% to S$526 million.
– There was strong performance in the derivatives sector, notably in currencies and commodities.
– Capital raising in cash equities remained sluggish.
– Plans for modernization of security systems and infrastructure upgrades were announced.
– Proposed final quarterly dividend of S$0.09 per share, reflecting nearly a 6% annualized increase.
– Adjusted expenses were 3% lower than reported; growth is anticipated at 2-4% excluding transaction-related expenses.

### Company Outlook
– SGX forecasts a revenue growth of 6-8% in the medium term, propelled by its OTC FX and exchange-traded derivatives businesses.
– The company intends to invest between S$70-75 million in capital expenditures for FY 2025.
– SGX aims to enhance its OTC FX contribution to a mid-to-high-single-digit percentage of group EBITDA in the medium term.
– Active engagement with the broader ecosystem is ongoing to gather insights and enhance service delivery.

### Bearish Highlights
– Subdued capital raising activity in cash equity markets continues to be a concern.
– No concrete guidance was provided regarding growth levels in equity derivatives.

### Bullish Highlights
– Notable growth in the derivatives franchise, with increased volumes and open interest in FX futures and commodities.
– The success of the GIFT Connect platform and plans for closer collaboration with the National Stock Exchange of India were emphasized.
– SGX is optimistic about an uptick in IPO activity and anticipates mid-single-digit growth in dividends.

### Misses
– No specific guidance on projected growth levels for equity derivatives was disclosed.

During the earnings call, SGX underscored its commitment to a multi-asset strategy. Plans to explore regional equities and yield-focused products align with investor demand, while efforts to boost stock market liquidity indicate a proactive stance. Ongoing investments in security and infrastructure modernization signal confidence in future capabilities. Coupled with a robust balance sheet and proposed dividend increase, SGX aims to enhance shareholder value as it extends its influence in the derivatives market amidst a vibrant financial landscape.

SGX’s emphasis on a multi-asset approach has been integral to its results over the years, with diversified revenue streams bolstering its core business. The firm continues to explore strategic growth opportunities while maintaining focus on enhancing market dynamics in Singapore and beyond.

The earnings call also featured discussions on sector engagement, with executives addressing broker and security house feedback. They expect growth in both Indian and Asian markets, as well as enhanced trading liquidity and volatility in China. The leadership aims to deliver a mid-single-digit CAGR for shareholders, with or without mergers and acquisitions.

As SGX maneuvers through the shifting financial landscape, it remains intent on enhancing its offerings across asset classes, establishing itself as an international multi-asset exchange dedicated to securing long-term growth.