Singapore Exchange Limited’s Share Price Is Down By 5% In The Last 3 Months: Here’s Why

Singapore Exchange Limited (SGX: S68) is the only stock exchange in town when it comes to Singapore.

Over the past three months, the company’s stock price has dipped by 5% even as the broader market, represented by the Straits Times Index (SGX: ^STI), has inched up by 2%.

Short-term movements often don’t tell investors much, but it could also be useful to see if there are any possible reasons why a company’s stock price has lost ground even when the market has climbed.

Reasons for declines

There are many reasons why a company’s share price could fall. But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related.

The former deals with how a company’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the company’s profit.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The specifics with Singapore Exchange

In the case of Singapore Exchange, there is a good example of the former being in action. Here’s some figures from the company’s latest earnings release (for the quarter ended 30 September 2016) to justify the point:

Source: Singapore Exchange earnings presentation

As you can see, the company’s latest quarter saw its revenue, operating profit, and more importantly, its net profit, fall by double-digit percentages.

That said, market sentiment on the stock does not seem to have drifted down, given that Singapore Exchange’s share price has declined by “only” 5% despite its profit coming in 16% lower.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.