July 30, 2020 / 10:32 AM / in 11 days

SGX cautions on market activity after jump in fourth-quarter profit

FILE PHOTO: An SGX sign is pictured at Singapore Exchange July 19, 2017. REUTERS/Edgar Su

SINGAPORE (Reuters) - Singapore Exchange Ltd (SGX) (SGXL.SI) reported a rise of nearly 17% in net profit for the quarter ending in June, but cautioned that a recent surge in market activity amid the coronavirus pandemic could start easing.

SGX and other exchanges benefited from extreme market volatility that boosted the volumes of equities and derivatives trading this year, but which have since stabilised.

SGX said fourth-quarter profit advanced to S$121.2 million from a year ago, while revenue rose 12.2%. It posted record full-year revenue of S$1.05 billion, up 16% from a year ago, while full-year net profit rose 21%.

“Looking forward to FY2021, market activity could ease following heightened volumes in the second half of FY2020,” Chief Executive Loh Boon Chye said in a statement.

“However, asset prices have recovered from recent lows, and a prolonged low interest rate environment may prompt investors to turn to capital markets for alternative returns,” he added.

Analysts say SGX faces a threat to its lucrative derivatives segment after index provider MSCI said in May it would shift licensing of many derivatives to Hong Kong.

SGX has said it would launch new access products and drive revenue in other asset classes, however.

Reporting by Anshuman Daga; Editing by Edmund Blair and Clarence Fernandez

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