Singapore Exchange, Asia's second-biggest listed bourse, posted its smallest profits in four quarters yesterday as trading volumes slowed due to weakness in global markets.

SGX, which ranks behind Hong Kong Exchanges and Clearing, did not give an outlook but said its fiscal third quarter ended March had been "a challenging quarter affected by the sharp downturn in global markets".

Analysts said the outlook remained difficult, with the decline in average daily stock trading on the exchange and a shrinking number of initial public offerings (IPOs) likely to continue in coming months amid weak global market sentiment.

"I'm bearish. If the US goes into a protracted recession, stock market activity in Singapore and the region will slow," said Matthew Wilson, an analyst at Morgan Stanley.

SGX reported a net profit of S$101.5 million ($74.74 million) for the three months to March, below the S$130 million to S$157 million earned in the preceding three quarters and slightly under the S$103 million average estimate of 4 analysts surveyed by Reuters.

According to SGX, the average daily value of stocks traded in Singapore fell about 20 percent to S$1.9 billion in the three months to March, from S$2.4 billion in preceding quarter.

SGX earnings were, however, up 14 percent from S$89.1 million a year ago as a rise in revenue from derivatives transactions offset a slight drop in securities market revenue.

Derivatives market revenue jumped 36 percent to S$39 million, while revenue from securities market trading, which typically account for about 60 percent of SGX's revenues, fell slightly to S$96.3 million.

SGX, like many other stock market operators around the world, has been trying to build its derivatives business by getting banks to launch new warrants and exchange traded funds (ETFs) in Singapore.

ABN AMRO Bank on Friday launched certificates that will track a commodities index designed by international investor Jim Rogers, while Taiwan stockbroker Yuanta in February launched structured warrants on three large Taiwanese electronic makers.

The Singapore bourse saw 11 IPOs during the quarter - up from 10 during the same period a year ago but down from 21 in October-December.

Shares of SGX fell 44 percent in the Jan-March period - more than Australian Exchange's 38 percent decline and Hong Kong Exchange's 40 percent retreat - on fears that falling stock prices and trading volumes would eat into earnings.

SGX's shares fared far worse than the benchmark Singapore index, which dropped 13 percent during the same period. SGX shares closed 4.2 percent lower yesterday.

Reuters

(HK Edition 04/15/2008 page4)