* SGX Q4 net profit seen at S$67 mln, down 16 pct y/y - poll
* Exchanges struggle with thin volume in weak markets
* CEO Bocker faces stiff challenge to boost retail investing
* SGX shares rise 8 pct this year, underperform market
By Anshuman Daga and Rachel Armstrong
SINGAPORE, July 27 (Reuters) - Singapore Exchange Ltd Chief Executive Magnus Bocker is facing a conundrum -- how to boost trading volume when global markets are battling a slump.
Bocker, whose contract was renewed for three years in June, has launched initiatives such as installing the world's fastest trading engine and signing agreements with foreign bourses to enhance liquidity in Asia's second-largest listed bourse by value.
Few of these measures are close to paying dividends yet and analysts expect SGX to report a nearly 16 percent fall in April-June profit on Friday, partly hit by a drop in securities-related revenue.
"We need to see securities volume come back. As long as it doesn't, the stock will hover around current levels," said Neo Chiu Yen, an equity analyst at ABN AMRO Private Banking. "The exchange has put all operational levers in place to capture a recovery in security volume."
SGX is expected to report net profit of S$67 million ($53 million) for its fourth quarter, according to the average forecast from five analysts polled by Reuters.
A key tenet of Bocker's plan to lift trading activity -- which aside from boosting revenue would encourage more big-ticket initial public offerings -- is to get more retail investors onto the city-state's stock market.
"We have a huge opportunity for us as a company to engage retail investors, to make them more active. It's good for the markets, it's good for their long-term savings and it's good for Singapore, for us, to become a much more attractive place to raise money," Bocker told an investment conference this year.
"So, that is something that you'll see us doing a lot more in the years to come," said the Swede, who joined SGX from Nasdaq OMX in December 2009.
Despite Singapore having a large proportion of wealthy citizens -- around 15 percent of households are millionaires -- less than 10 percent of retail investors are active on the stock market, compared with 17 percent in Australia and 25 percent in Hong Kong.
SGX is trying to change that by giving retail investors a larger share of IPOs and running investor education courses. But it could struggle to make any major headway in the near term.
BULLET TRAIN VS LOCOMOTIVE
"Magnus is on a bullet train and the investors are on a locomotive," said David Gerald, chief executive of the Securities Investors Association of Singapore. "It will take time, another 10 years of investor education, and maybe we'll get there."
This year, Bocker took direct responsibility for the listings business as part of overhauling SGX's structure.
SGX has been hit by weak global markets, which forced companies to pull listing plans. Last week, India's Reliance Communications shelved a planned Singapore IPO by its undersea cable unit to raise up to $1 billion.
SGX has denied it is in merger talks with London Stock Exchange, while last month Hong Kong stock exchange agreed to pay $2.2 billion to buy the London Metal Exchange.
SGX shares have risen 8 percent this year, underperforming a 13 percent increase in Singapore's benchmark index.
"Efforts to drive up trading liquidity, diversify revenue sources and attract quality listings will only bear fruit in the longer term," CIMB, which has a 'neutral' rating on SGX, said in a report on Thursday. "The near-term outlook remains gloomy."