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4 Quick Things Investors Should Learn About Singapore Exchange Limited

Singapore Exchange Limited (SGX: S68) – or more popularly known as SGX – is one of the cool companies in Singapore which shares webcasts of their quarterly earnings presentations (the link for SGX is here).

As a share market operator, SGX levies fees from the listing of securities, as well as for the clearing of securities trades and derivative contracts. It also earns its keep by providing other services like market data feeds for risk management and back office applications.

You can read more about SGX in here and here.

What’s behind SGX’s results?

Below are four useful things I learned from listening to SGX’s fiscal third-quarter webcast for the financial year ending 30 June 2015 (FY2015):

  1. The reduction in the board lot size to 100 units in January this year has had an impact in the trading profile of retail investors. The number of daily trades per retail client rose by 22% quarter on quarter, with a preference towards stocks which are constituents of Singapore’s market benchmark, the Straits Times Index (SGX: ^STI). As mentioned in the quarterly report, 54% of trade orders were for lot sizes under 1,000 units. Furthermore, the number of trades were up 104% while the order to trade ratio – that is, the ratio for number of orders needed for each trade – was 198%. Chief Executive Officer Magnus Bocker surmised that the changes made on the board lot sizes has worked.
  2. SGX is also active on the investor education front with it launching 10 e-tutorials for the retail market which has had 80,000 viewers. SGX also reached out to the National Institute of Education (NIE) to provide investment education courses to the institute’s 30,000 teachers. Meanwhile, the company’s StockFacts feature has had over 3 million visitors and 18,000 daily users. Speaking on StockFacts, Bocker highlighted the addition of the governance and transparency index (GTI) score; the addition allows users to sort companies according to their GTI score.
  3. On SGX’s China business, Bocker took time to introduce Lawrence Wong as the new head of its Listings in China. Wong will be relocating to China to support SGX’s growth in the country. Notably, 20% of listed companies in Singapore’s stock market are from China.
  4. Further on its China business, SGX’s acquisition of the Energy Market Company (EMC) on 1 October 2014 was to support the company’s “third pillar” of growth, commodity trading. Elsewhere, Bocker also said that the Memorandum of Understanding with Chengdu was important in facilitating listings of companies from Chengdu on the SGX.

Foolish takeaway

To buy and hold a company’s shares for the long term also means keeping up with developments in the firm.

The access to management teams via webcasts gives the Foolish investor a fair chance to judge on whether they’d like to be invested alongside those teams. It also helps us put together a more complete thesis around a company and keep up with developments in its industry.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.