SINGAPORE - The Singapore Exchange (SGX) will expand its multi-asset offerings and drive the growth of its emerging products, said chief executive Loh Boon Chye, amid falling revenues from equities and fixed income.

SGX posted a net profit of $281.6 million in the first half of the 2024 financial year that ended on Dec 31, 2023, a drop of 1 per cent compared with $284.6 million a year ago.

Its earnings before interest, taxes, depreciation and amortisation grew 3.2 per cent to $344.6 million, SGX said in its half-year report on Feb 1.

Earnings per share stood at 26.3 cents.

When adjusted to exclude certain non-cash and non-recurring items “that have less bearing on SGX’s operating performance”, the group posted a net profit of $251.4 million, which is a growth of 6.2 per cent year on year.

Adjusted earnings per share stood at 23.5 cents.

SGX’s revenue also climbed to $592.2 million, an increase of 3.6 per cent.

Mr Loh said: “Our multi-asset offering continued to serve our customers well in a persistently challenging macro environment.

“Our currency and commodity derivatives business has been a growing contributor to revenue, and our OTC FX franchise is making good progress, with average daily volume consistently reaching US$100 billion (S$134 billion) in recent months.”

OTC FX refers to over-the-counter trading, where currencies are traded through a broker-dealer network.

Currencies and commodities revenue increased by 29.5 per cent to $148 million, of which OTC FX revenue accounted for 27.7 per cent.

Mr Loh noted that trading activity has been robust in new currency pairs such as the South Korean won against the US dollar and the Thai baht against the US dollar.

“To capitalise on the opportunities in the current market environment, we plan to broaden our product suite to include interest rates derivatives,” he said.

He added that SGX will also continue to enhance OTC FX platforms with new functionalities using data analytics and artificial intelligence.

Mr Loh also noted that the growth in commodities volume was driven by a sharp increase in iron ore volumes. Iron ore derivatives grew almost 50 per cent year on year.

However, fixed income revenue decreased by 8.4 per cent. There were 489 bond listings raising $131.7 billion, compared with 449 bond listings raising $104.3 billion a year earlier.

Revenue from cash equities also declined by 5.6 per cent.

SGX recorded four new equity listings, which raised $19 million, while secondary equity funds raised came in at $600 million.

Revenue from derivatives equities also fell by 6.9 per cent.

Mr Loh said SGX continues to enlarge and broaden its shelf in exchange-traded funds (ETFs). It listed new ETFs in the first half of the 2024 financial year, including a landmark climate action ETF with BlackRock to catalyse sustainable investing in Asia.

SGX securities also launched its first active ETF on Jan 31, with the listing of the Lion-Nomura Japan Active ETF with assets under management of $37 million.

Mr Loh added that there could be muted global economic growth in the year ahead, with geopolitical concerns that may affect market sentiment and risk appetite.

“While interest rates are starting to stabilise and possibly decline, geopolitics will continue to dominate and could dull economic growth globally... There will be a record number of elections in major markets this year, which could lead to some volatility in the markets,” he said.

“We are cautiously optimistic that investors will turn to our derivatives suite to manage portfolio risks.”

But he added that SGX will still forge ahead with its plans to strengthen its multi-asset offerings and network.

“The resilience of our multi-asset strategy as well as healthy financial position and discipline will enable us to capitalise on conditions across cycles,” he said.

“To drive growth, we will focus on expanding our solutions to capture opportunities in Asia, grow our emerging products and further strengthen our global distribution and network.”

The board has declared an interim quarterly dividend of 8.5 cents per share, payable on Feb 20, which brings the total dividends in the first half of the 2024 financial year to 17 cents per share.

SGX added in a statement that it is cautious about the near-term outlook as prospects for global growth appear muted. It will remain prudent in managing its expenses and capital expenditure.

It lowered its projected capital expenditure for the 2024 financial year to be within $70 million to $75 million, down from the previously stated $75 million to $80 million range.