SGX 4Q13 profits predicted to inch 6.5% higher to $104m

To be fueled by derivatives volume.

According to CIMB, SGX will be releasing FY13 results on 23 Jul after market close. Analysts expect a 4QFY13 net profit of S$104m (+6.5% qoq), compared with the Street’s S$91m. 

They believe earnings will be powered by derivatives volume (+14.1% qoq). In particular, Nikkei 225 Index Futures volume had grown 28.9% qoq.

Here's more from CIMB:

Conversely, we expect securities to drag down earnings as securities ADVT fell 7.2% qoq to S$1.6bn. Average turnover velocity, a measure of investor interest, dipped from 56% in 3QFY13 to 54% in 4QFY13.

We think consensus has yet to reflect SGX’s higher derivatives volumes in May/Jun.

We expect near-term earnings to be weighed down by poorer investor sentiment as markets are very concerned with rising interest rates.

This has already been reflected in a sudden fall in securities ADVT from S$1.7bn in Jun to S$1.2bn in the first week of Jul. SGX is taking steps toshift away from securities trading but its initiatives will take time.

Securities trading remains its bread-and-butter for now. On the bright side, some earnings support could come from derivatives trading, which has seen 26% yoy revenue growth in 3QFY13.