SGX hopeful equities business will improve if liquidity and other issues are addressed

SGX Group chief executive officer Loh Boon Chye on Thursday (Oct 10) assured shareholders that it is committed to growing its equities business.

“We are hopeful that our cash equities business will improve when all quarters of the ecosystem rally together to structurally improve liquidity and trading,” Loh said at the Singapore Exchange’s (SGX) annual general meeting (AGM).

Acknowledging that the stock market is an important pillar of Singapore’s financial ecosystem, he said improvement on the equities front remains high on SGX’s agenda.

“There are multiple areas that need to be looked into – across demand, supply and the ecosystem – and we will work closely with the MAS Review Group on initiatives to structurally improve liquidity of the stock market,” he added.

Loh shared that SGX aims to achieve a compound annual growth rate of 6 to 8 per cent in group revenue, excluding treasury income, over the medium term. This growth is expected to be primarily driven by low to mid-teens percentage increases in their over-the-counter foreign exchange and exchange-traded derivatives businesses.

He also highlighted that in FY2024, SGX had more participants in its cash equities market, with securities daily average value (SDAV) improving about 20 per cent in the second half. Concurrently, retail investors bought a net S$2 billion in cash equities, which is over 140 per cent higher than the previous year.

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The bourse’s financial year runs from Jul 1 to Jun 30.

The momentum continued into the new financial year, with the SDAV rising more than 30 per cent year on year for the first quarter of FY2025 and reaching S$1.45 billion last month – the highest level since May 2022.

However, the total number of listed securities on SGX has fallen to 620 in September this year, from 635 in September 2023.

Growth concerns

At the AGM, one shareholder questioned the board regarding the sources of growth for the bourse, considering concerns around the cash equities business.

He pointed out that SGX’s operating expenses have increased by over 30 per cent, while operating profit has only risen less than 10 per cent over the past five years. He also raised concerns on operating expenses increasing at a faster rate than revenue growth.

In addition, he asked if the board is adequately addressing staff costs and ensuring that staff are compensated fairly without overpaying.

In response, SGX chairman Koh Boon Hwee said the bourse continually scrutinises its costs, noting that many expenses arise from technology investments as the business is inherently tech-intensive.

At the AGM, shareholders approved directors’ fees of up to S$1.8 million for all directors – excluding the CEO – for FY2025, unchanged from the year before.