SGX-Nomura

2Q FY09: within expectations ; Maintained Reduce
􀁺 Average securities daily value traded (DVT) continued to fall in 2Q
FY09 by 19% q-q to S$1bn (versus our FY09F forecast of
S$1.1bn), while clearing fees declined by a more muted 12.7% q-q
as the share of uncapped trades (ie, those paying the full 4bp fee)
rose to 63% (from 58% in 1H FY09). We estimate every 10% drop
in DVT cuts forecast earnings by 6%.
􀁺 Derivatives revenues (up sequentially since FY07) also fell by
7.2% q-q. While SGX has fared better than peers in resisting the
fall in global derivatives volumes, the Nifty contract saw a 46% q-q
drop in contracts traded as foreign institutional investors’ interest in
India waned. However, as seen in the OTC clearing business via
AsiaClear and the commodities business via SICOM, open interest
continues to grow, boding well for future volume traded.
􀁺 Stable revenues were hurt by lower listing fees (only four IPOs)
and reduced corporate action activities. But with operating costs
tightly controlled, 2Q operating leverage hit a record 147%.