* 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 Singapore Exchange Ltd
Chief Executive Magnus Bocker is facing a conundrum --
how to boost trading volume when global markets are battling a
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
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
"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
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
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."