Singapore Exchange Ltd. said its fiscal third-quarter net profit fell 10% from a year earlier year due to costs associated with the group's failed bid for ASX Ltd., the operator of the Australian stock exchange, and continued technology investment, The Wall Street reports.
Magnus Böcker, the group's chief executive, continued to flag the exchange's renewed focus on organic growth in the wake of the Australian government's rejection of SGX's offer for ASX.
However, he also suggested in general terms that while the scope for exchange consolidation in Asia remains limited there is potential for a trans-Pacific exchange tie-up.
Net profit for the three months ended March 31 was 67 million Singapore dollars ($53.7 million), down from S$74.6 million a year earlier, the exchange said Tuesday.
Excluding S$12 million in one-time costs in the third quarter associated with SGX's A$8.4 billion proposed bid for ASX and S$1.7 million in net gains from the disposal of a freehold property, profit was S$77.3 million.
Revenue rose 10% to S$168.8 million, compared with S$153.3 million in the same period last year, helped by growth in the exchange's core securities and derivatives businesses.
Expenses rose 18% to S$75 million from S$63.6 million on the back of SGX's increased spending on technology initiatives such as a new data center and new high-frequency trading networks.
SGX Chief Financial Officer Seck Wai Kwong said he expects capital expenditure for the current investment cycle to peak this year. For financial year 2011 ending June 30, SGX has set a capital expenditure target of S$60 million-S$65 million.
Despite the Australian government's rejection of the merger with the ASX this month, Mr. Böcker said the SGX "remains well-positioned to leverage on opportunities within the region's vibrant and dynamic economies" adding it that it will continue to pursue organic as well as other strategic growth opportunities.
"Market activities in this quarter have been affected by global events," Singapore Exchange said in a statement. "Nonetheless, SGX, with its various initiatives, is well positioned to capture opportunities arising from its Asian Gateway strategy, given the underlying growth trajectory of Asian economies and capital markets."
Mr. Böcker, who moved to SGX in late 2009 from Nasdaq OMX where he was president, is no stranger to merger activity, having been appointed to his role at the U.S. exchange through a merger of the Nasdaq Stock Market and OMX AB, which operates exchanges in northern Europe.
He said that despite the economic opportunities in Asia, the fragmented nature of markets and economic policies in the region mean it could be some time before the European- and U.S.-style benefits of cross-border exchange activity are seen.
However, a tieup between a U.S. exchange and an Asian one remains a stronger possibility.
"Would it be of value to bring an Asian exchange together with a U.S. exchange? I would be surprised if someone did not come up with it," Mr. Böcker said at a media briefing. "There are X hundred exchanges world-wide so I guess someone will come up with that idea."
Despite volatility in global financial markets in the fiscal third quarter, SGX hosted Southeast Asia's largest initial public offer with Hong Kong-based billionaire Li Ka-shing's Hutchison Port Holdings Trust, raising US$5.5 billion.
Mr. Böcker said the current IPO pipeline for the exchange is "the longest we've ever had."
SGX shares fell 1.6% to S$7.95 late Tuesday in Singapore, more than a 0.9% fall in the benchmark Straits Times Index.
The fall in the share price prompted bank OCBC to upgrade its recommendation on the stock to Buy from Hold previously and maintained its fair value estimate for the share price at S$8.97.
"We believe that SGX is still an interesting investment, especially with the changing global landscape of more mergers and acquisitions," OCBC analyst Carmen Lee said.
Magnus Böcker, the group's chief executive, continued to flag the exchange's renewed focus on organic growth in the wake of the Australian government's rejection of SGX's offer for ASX.
However, he also suggested in general terms that while the scope for exchange consolidation in Asia remains limited there is potential for a trans-Pacific exchange tie-up.
Net profit for the three months ended March 31 was 67 million Singapore dollars ($53.7 million), down from S$74.6 million a year earlier, the exchange said Tuesday.
Excluding S$12 million in one-time costs in the third quarter associated with SGX's A$8.4 billion proposed bid for ASX and S$1.7 million in net gains from the disposal of a freehold property, profit was S$77.3 million.
Revenue rose 10% to S$168.8 million, compared with S$153.3 million in the same period last year, helped by growth in the exchange's core securities and derivatives businesses.
Expenses rose 18% to S$75 million from S$63.6 million on the back of SGX's increased spending on technology initiatives such as a new data center and new high-frequency trading networks.
SGX Chief Financial Officer Seck Wai Kwong said he expects capital expenditure for the current investment cycle to peak this year. For financial year 2011 ending June 30, SGX has set a capital expenditure target of S$60 million-S$65 million.
Despite the Australian government's rejection of the merger with the ASX this month, Mr. Böcker said the SGX "remains well-positioned to leverage on opportunities within the region's vibrant and dynamic economies" adding it that it will continue to pursue organic as well as other strategic growth opportunities.
"Market activities in this quarter have been affected by global events," Singapore Exchange said in a statement. "Nonetheless, SGX, with its various initiatives, is well positioned to capture opportunities arising from its Asian Gateway strategy, given the underlying growth trajectory of Asian economies and capital markets."
Mr. Böcker, who moved to SGX in late 2009 from Nasdaq OMX where he was president, is no stranger to merger activity, having been appointed to his role at the U.S. exchange through a merger of the Nasdaq Stock Market and OMX AB, which operates exchanges in northern Europe.
He said that despite the economic opportunities in Asia, the fragmented nature of markets and economic policies in the region mean it could be some time before the European- and U.S.-style benefits of cross-border exchange activity are seen.
However, a tieup between a U.S. exchange and an Asian one remains a stronger possibility.
"Would it be of value to bring an Asian exchange together with a U.S. exchange? I would be surprised if someone did not come up with it," Mr. Böcker said at a media briefing. "There are X hundred exchanges world-wide so I guess someone will come up with that idea."
Despite volatility in global financial markets in the fiscal third quarter, SGX hosted Southeast Asia's largest initial public offer with Hong Kong-based billionaire Li Ka-shing's Hutchison Port Holdings Trust, raising US$5.5 billion.
Mr. Böcker said the current IPO pipeline for the exchange is "the longest we've ever had."
SGX shares fell 1.6% to S$7.95 late Tuesday in Singapore, more than a 0.9% fall in the benchmark Straits Times Index.
The fall in the share price prompted bank OCBC to upgrade its recommendation on the stock to Buy from Hold previously and maintained its fair value estimate for the share price at S$8.97.
"We believe that SGX is still an interesting investment, especially with the changing global landscape of more mergers and acquisitions," OCBC analyst Carmen Lee said.