By Saeed Azhar
SINGAPORE (Reuters) - Singapore Exchange
Its fiscal third quarter earnings were driven by a nearly 10 percent rise in revenues from derivatives that partly offset a drop in core securities revenue of 12 percent due to an annual fall in the traded value of shares.
SGX could see its fortunes improve in the next few quarters as a number of billion-dollar listings are expected to hit the exchange.
Motor racing business Formula One plans a $2 billion initial public offering in July, sources have told Reuters, which would coincide with India's Reliance Communications
English Premier League soccer champions Manchester United are also considering a $1 billion IPO in Singapore, although the timing for any deal remains uncertain.
SGX chief executive Magnus Bocker took direct responsibility for the listings business recently to drive the exchange's growth after his $8 billion takeover bid for bourse operator ASX
Bocker said SGX is seeing growing interest from Singapore and international companies to seek a listing but he cautioned that market volumes would continue to be driven by global economic factors.
SGX reported January-March net profit of S$77.8 million, compared with S$67 million a year earlier when profit was partly hit by costs linked to its failed bid for ASX.
The latest profit figure was above the S$75 million average forecast of five analysts surveyed by Reuters.
A wave of consolidation has swept long-established exchanges as they look to fight off upstart competitors. SGX had also teamed up with the London Stock Exchange to bid for the London Metal Exchange, sources told Reuters, but it is unclear whether it is still pursuing the takeover.
SGX has consistently declined to comment on the matter.
SLEW OF DERIVATIVES
Bocker, a Swede who joined SGX from Nasdaq OMX, has introduced a slew of derivatives and other products to try to reduce the exchange's reliance on securities.
Securities income accounted for 40 percent of SGX's revenue in its third quarter and derivatives made up 26 percent.
UBS recently estimated that of SGX's revenue from derivatives, 90 percent still comes from four products - futures on Japan's Nikkei 225, Taiwan shares, India's Nifty and MSCI Singapore.
SGX's securities market revenue fell 12 percent to S$65 million in January-March from a year earlier, hurt by a 15 percent drop in the average traded value of stocks.
Derivatives revenue climbed to S$42.5 million from S$38.8 million a year earlier.
The Singapore bourse operator has a market value of about $5.8 billion, slightly below ASX. Hong Kong Exchanges and Clearing Ltd (HKEx) <0388.HK> is the biggest listed bourse in Asia with a market capitalisation of about $18 billion.
SGX shares ended 0.3 percent higher on Tuesday before the results were announced. SGX stock has risen about 9.6 percent so far in 2012, beating ASX's rise of nearly 5 percent and HKEx's gains of 4.4 percent.
Singapore's benchmark STI index has risen about 13 percent so far this year.
(Additional reporting by Leonard How; Editing by John O'Callaghan and Joseph Radford)