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3 Insights From Singapore Exchange Limited’s Latest Annual Report

Singapore Exchange Limited (SGX: S68), or SGX, is Singapore’s sole stock exchange. The group provides a platform for the trading, buying, and selling of securities such as fixed income, equities, and derivatives. SGX also provides listing, clearing, settlement, and data services to listed companies.

SGX has just published its FY 2019 annual report (the group has a 30 June year-end). The group has performed well in the last fiscal year, with revenue hitting a post-IPO high of S$910 million, up 8% year on year, while net profit attained an 11-year high of S$391 million, also up 8% year on year.

Browsing through the annual report allowed me to see what SGX has achieved over the last year and how the business has grown steadily. The letter from Chairman Kwa Chong Seng and CEO Loh Boon Chye was especially informative.

Here are three insights I gained from SGX’s latest annual report.

1. A suite of new derivative products launched

SGX has grown its derivatives division strongly in FY 2019, with revenue rising by 35% year on year to S$459.7 million. This division now takes up the bulk of revenue at 51%. Some of the new products released include an additional nine contracts for SGX MSCI Net Total Return futures contracts. In May 2019, the division also launched interest rate derivatives on Japan’s repo with the introduction of Asia’s first Total Return Futures based on the Nikkei 225 Index.

A total of 56 new daily leverage certificates on local and regional stocks were listed in order to provide individual traders with more avenues and opportunities to gain exposure to Asian indices and large-cap stocks.

2. SGX’s platform offers more financing opportunities

Companies look to SGX as a method for fundraising, and I’m not just talking about issuing shares (i.e., equities), but also debt financing. SGX’s debt capital market remains an attractive venue for companies to raise capital, and the group’s platform also supports other innovative types of financing apart from pure debt issuance.

Asia’s first infrastructure project finance note was recently listed, and the listing of Temasek’s inaugural retail bond as well as the second Astrea private equity bond also attest to SGX’s capabilities in handling different forms of financing.

3. Bolt-on acquisitions to boost capabilities

SGX also conducted many bolt-on acquisitions to boost capabilities in various areas such as bonds trading, foreign exchange, and derivative products. Examples of these investments include Trumid, a US-based financial technology company and electronic trading platform for corporate bonds, BidFX, a specialised trading platform for global foreign exchange (Fx) markets, and Freightos, a digital freight platform and data firm.

These investments augment SGX’s strengths in Fx futures, fixed income, and freight derivatives and broaden the suite of products and services it offers to traders and investors.

More growth in FY 2020 and beyond

With the many growth initiatives put in place by management in FY 2019, investors can look forward to sustained growth in FY 2020 and beyond. Management is committed to growing SGX into a strong and recognised multiasset exchange and is charting a slow but steady growth plan for the bourse.

The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange Limited. Motley Fool Singapore contributor Royston Yang owns shares in Singapore Exchange Limited.