UPDATE 1-S'pore Exchange Q2 net nearly doubles on trade volume

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By Baizhen Chua

SINGAPORE Jan 15 (Reuters) - Singapore Exchange (SGXL.SI) said on Tuesday its quarterly net profit almost doubled to beat expectations on a surge in stock and derivative trading, and said it will continue focusing on foreign listings in the city-state.

Analysts said the outlook for Southeast Asia's top bourse operator was still murky as market uncertainties may cap trading volumes in coming quarters.

"Our efforts to grow foreign listings continue to yield results," SGX Chief Executive Hsieh Fu Hua said in a statement. "Along with other key initiatives that we have put in place, SGX is focused on our growth as an Asian gateway."

SGX, which ranks behind Hong Kong Exchanges and Clearing (HKEx) (0388.HK) among Asia's listed bourses, saw 44 new listings in the first half of its financial year, up from 28 a year earlier. Of that 32 were foreign companies.

The bourse operator posted a second-quarter net profit of S$122.4 million, excluding exceptional items, compared with S$63.7 million a year ago.

This was above the average forecast of S$107 million ($75 million) by three analysts polled by Reuters, thanks to greater trading of stocks.

SGX also announced a dividend of 3.0 cents a share in the second quarter.

Despite outperforming expectations, market watchers said SGX could be seeing an end to its winning streak as stock market skittishness may erode corporate earnings in coming months.

"Market conditions only started to deteriorate at the end of the quarter. What we're seeing now may not be fully reflected in the results," Morgan Stanley analyst Matthew Wilson told Reuters before the results announcement.

Shares of SGX slipped as much as 8.4 percent to a four-month low on Tuesday ahead of the results on market expectations of sluggish trading activities in the near future.

Daily average trading turnover more than doubled to S$2.5 billion from S$1.1 billion a year before, SGX said in a statement.

Second-quarter operating revenue was up 63 percent to S$203.6 million from a year earlier, with securities market revenue at S$122.0 million compared to S$64.1 million last year.

Net derivatives clearing revenue rose to S$38.6 million, from S$27.5 million a year earlier.

SGX enjoyed record quarterly profits last year as optimism in domestic growth drove a surge in trading appetite for property and banking counters.

Trading volumes in the city-state also surged as Asian stock indexes hit record or multi-year highs, and as SGX attracted listings from Chinese firms.

SGX shares climbed to a record S$17.20 in October and more than doubled last year, helped by speculation the exchange may be a takeover target amid mergers and acquisitions in the industry.

The benchmark Straits Times Index .FTSTI gained around 17 percent in 2007.

Trading at nearly 23 times forecast earnings, SGX is cheaper than HKEx at 34.4 times. Australian Stock Exchange (ASX.AX), Asia's No.3 listed bourse, trades at 23.2 times. (Editing by Saeed Azhar and Neil Chatterjee)