Singapore Exchange Earnings Call Highlights Broad-Based Strength

Singapore Exchange ((SPXCY)) has held its Q2 earnings call. Read on for the main highlights of the call.

Singapore Exchange (SGX) struck an upbeat tone in its latest earnings call, underscoring broad-based operational strength, margin expansion and record activity across several key franchises despite pockets of pressure from lower treasury income, a Scientific Beta impairment and slightly higher costs. Management repeatedly emphasized that the core businesses are firing on multiple cylinders, with robust client engagement, healthy balance sheet metrics and a sharply higher dividend signalling confidence that recent momentum is durable rather than cyclical.

Record Half-Year Financial Performance

SGX delivered a strong set of half-year numbers, with group net revenue rising 7.6% to $695 million. Excluding treasury income, net revenue climbed 10% year-on-year and 8% versus the prior half, highlighting the strength of the underlying business rather than rate-driven income. Adjusted group net profit after tax increased 11.6% to $357 million as expenses were kept in check, rising just 3.8%. This cost discipline drove operating leverage, with adjusted operating profit margin up 1.4 percentage points and adjusted NPAT margin up 1.8 points. For investors, the key message is that SGX is growing profit faster than revenue while maintaining tight control over its cost base.

Equities-Cash Momentum and a Rejuvenated Stock Market

Equities-cash was a standout, with revenue up 16% (an increase of $31 million) and contributing 32% of total group revenue. Singapore’s average daily trading value (SDAV) rose 20% to SGD 1.51 billion, the highest level in five years, reflecting renewed risk appetite and stronger market participation. The Straits Times Index delivered a 23% one-year return, helping fuel activity. Notably, small and mid-cap trading was exceptionally strong, with SDAV more than doubling and contributing nearly half of overall SDAV growth, while ETFs and structured products (SDRs) accounted for over 10% of SDAV growth. The data suggests a broader and deeper cash market, with more investors participating across the capitalization spectrum.

FX Franchise Expansion and Record Currency Volumes

SGX’s FX business continued its rapid expansion, cementing the exchange’s status as a key regional FX hub. Net revenue from SGX FX rose 8%, supported by a record average daily value of USD 180 billion. That represented around 32% year-on-year growth in ADV and an impressive compound annual growth rate of roughly 39% since the FX franchise was launched. Management highlighted industry recognition, with SGX being named the World’s Best FX Exchange and awarded for the World’s Best Solution for FX NDFs. These accolades, together with the rapid scaling of volumes, underline the strategic importance of FX as a growth engine and diversification pillar for the group.

Derivatives and Commodities: Broad-Based Volume Growth

Derivatives activity remained robust despite tough comparisons against a strong prior year. Overall derivatives daily average volume (DAV) grew 8% year-on-year, pushing SGX to its highest half-year derivatives DAV on record at 1.35 million contracts. FX and rates derivatives were particularly strong, delivering 18% DDAV growth. Fixed income, currencies and commodities (FICC) revenue increased by $20 million, or 12%, and now accounts for 26% of total revenue. Commodities were a bright spot, with total volume up 24%, led by record trading in iron ore contracts. This breadth across asset classes underlines SGX’s evolution from a domestic equity exchange into a diversified multi-asset marketplace.

Platform, Data and Connectivity: Steady Revenue Expansion

Platform and other revenue rose 7%, adding $8 million and now representing 18% of group revenue. Growth was driven by higher colocation demand and repricing of data and connectivity services, as clients increasingly value low-latency access and premium data. Management is investing in data and platform modernization, including the build-out of a central “data lake,” to support new products, analytics and client-facing tools. For investors, this segment offers both high-margin recurring revenue and strategic value, anchoring SGX’s role as an infrastructure and information provider rather than just a trading venue.

Balance Sheet Strength and a Bigger Dividend Cheque

The balance sheet remains a core part of SGX’s investment case. Moody’s reaffirmed its AA2 rating, and the leverage ratio stood at a conservative 0.8x, giving the exchange substantial financial flexibility. Reflecting this strength, the board declared an interim dividend of $0.11 per share for the quarter, taking total H1 dividend to $0.2175 per share—more than 20% higher than a year earlier. Management reiterated its commitment to incremental dividend increases of $0.025 every quarter through FY 2028, signalling strong confidence in the sustainability of cash flows. For income-focused investors, this amounts to a clear, visible dividend growth pathway.

One-Off Cash Inflow from 7RIDGE Divestment

SGX also benefited from a one-off cash inflow from the sale of its stake in 7RIDGE’s trading technologies business, with the divestment closing in November. The proceeds are reflected in the cash flow but not treated as recurring earnings. Management noted that the additional liquidity provides optionality to manage the balance sheet, particularly by reducing near-term debt maturities. While not a driver of ongoing earnings, this transaction further enhances financial flexibility at a time when SGX is balancing investment needs with its dividend growth commitments.

Product Innovation and Market Development Initiatives

Innovation remains a key strategic focus. SGX launched what it described as the world’s first regulated exchange-traded crypto perpetual futures, providing institutional-grade exposure to digital assets within a regulated framework. The exchange also introduced a 20-year Japanese government bond (JGB) futures contract, expanding its rates curve, and rolled out T+1 night trading for rubber futures in late January. These initiatives broaden SGX’s multi-asset offering and open up new client segments, from crypto market participants to global fixed income traders and commodities users who require around-the-clock risk management tools.

Stronger IPO Pipeline and the Global Listing Board Push

On the primary markets side, SGX led Southeast Asia in IPO funds raised during the half, with close to SGD 3 billion brought to market. The IPO pipeline is also building, with more than 30 prospective listings flagged by management and 18 of the previously announced 30 having already come to market. A key strategic initiative is the partnership with NASDAQ to launch a Global Listing Board (GLB), targeted for mid-year. The GLB is designed to attract high-growth issuers and facilitate dual listings, positioning SGX as a complementary venue for global companies seeking Asian investor access and deeper liquidity.

Retail and Institutional Participation on the Rise

The call also pointed to healthier market participation dynamics. Retail investors’ involvement in cash equities rose to a four-year high, signalling renewed interest from individual investors in the Singapore market. On the institutional side, net purchases of small and mid-cap stocks reached SGD 450 million, suggesting that professional investors are increasingly active beyond blue-chip names. ETFs continued to gain traction, with total ETF assets under management climbing to SGD 18 billion, including SGD 3.7 billion in the STI ETF alone. Collectively, these trends support higher and more diversified trading volumes across SGX’s cash market.

Treasury Income Compression Hits the Top Line Mix

A key headwind came from treasury income, which declined materially due to changes in the global interest rate environment and the mix of collateral currencies. This weighed on reported net revenue and complicated the year-on-year comparison. Management stressed that treasury income remains sensitive to rate moves and currency composition, and that it is actively managing duration and its collateral profile to reduce volatility. Importantly, underlying net revenue excluding treasury income still posted double-digit growth, highlighting that the core franchise is offsetting the drag from lower rate-related earnings.

Equity Derivatives Revenue Under Pressure

Equity derivatives showed some weakness, with revenue down $10 million or 6%, even though total volume held steady at 91 million contracts. The decline was attributed mainly to lower treasury income rather than a deterioration in client trading demand. This indicates that the product set and customer engagement remain intact, but the earnings contribution from the business is currently being masked by the same rate-related factors affecting treasury income more broadly.

Scientific Beta Impairment Flags Challenges in Index Business

SGX recorded a $15 million impairment on its Scientific Beta unit, citing lower-than-expected performance and shifts in investor preferences in the index and factor investing space. The impairment led to a goodwill write-down and signals that this acquired business has underperformed earlier expectations. While the hit is non-cash in nature, it highlights the challenges SGX faces in scaling certain non-core segments and underscores the importance of disciplined capital allocation in future inorganic moves.

Higher Operating Costs and Professional Fees

Costs edged higher, though remained well contained relative to revenue growth. Other expenses increased by $5 million, partly due to higher professional fees and the absence of prior Financial Sector Development Fund grants supporting the FX business. Staff costs rose by $4 million, or 2.6%, driven by higher headcount as SGX invests in growth initiatives. Management indicated that some investment spend will be skewed to the second half but reiterated unchanged full-year expense and capital expenditure guidance. The cost profile currently supports margin expansion and appears manageable given the pace of top-line growth.

Uncertain Timing for Future Bolt-on Acquisitions

On the mergers and acquisitions front, SGX continues to evaluate bolt-on opportunities, particularly in areas such as freight and the digitalization of freight markets. However, management offered no concrete targets or timelines, suggesting that while inorganic growth remains on the strategic agenda, execution visibility is limited in the near term. Investors looking for deal-driven catalysts may therefore need to be patient, with growth likely to remain predominantly organic in the short to medium term.

Macro Volatility and a High Base Raise Comparison Risks

Executives acknowledged that some of the impressive growth metrics are being measured against an already elevated prior-year base, which was supported by macro events such as China stimulus measures and heightened market volatility. While they highlighted clear signs of recovery and ongoing momentum, management also conceded that reliance on volatility-boosted volumes introduces variability into future comparisons. For shareholders, this means that while structural growth drivers are intact, quarterly and half-year performance may continue to fluctuate with shifts in global risk sentiment and macro conditions.

Outlook and Guidance: Steady Growth, Disciplined Investment

Looking ahead, SGX reaffirmed its target of delivering 6–8% organic top-line compound annual growth, excluding treasury income. Full-year FY 2026 expense and CapEx guidance remains unchanged, reflecting confidence that the group can continue reinvesting in growth while maintaining cost discipline. Management highlighted strong underlying momentum in the first half—net revenue excluding treasury income up 10%, total net revenue up 7.6% to $695 million, adjusted NPAT up 11.6% to $357 million, and margins improving. By segment, equities-cash revenue grew 16% and now makes up 32% of group revenue, derivatives DAV increased 8%, SGX FX net revenue rose 8% with ADV up 32% year-on-year, FICC revenue climbed 12% to 26% of revenue with commodities volume up 24%, equity derivatives dipped 6% to 24% of revenue, and platform and other revenue rose 7% to 18% of revenue. Management reiterated its commitment to a sustainably rising dividend—adding $0.025 each quarter through end-FY 2028—and signalled that some of the strong cash generation and one-off proceeds may be used to pay down debt as bonds mature.

In closing, the earnings call painted a picture of a confident exchange operator delivering record or near-record activity across key franchises, while navigating rate-related headwinds and isolated setbacks such as the Scientific Beta impairment. The combination of broad-based volume growth, expanding margins, a solid balance sheet and a clearly articulated dividend growth plan should appeal to both growth and income-oriented investors. While reliance on macro-driven volatility and some uncertainty around future acquisitions remain watch points, SGX’s core businesses appear well positioned to sustain steady organic growth in the years ahead.