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SGX 1H FY2026 Breaks Records! Why This Is Their Best Year Ever · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Have you been watching the Singapore markets lately? I feel like for the longest
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  time, you know, it's been the sleeping giant of Southeast Asian finance. Oh, absolutely.
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  The safe bet. The place you put your money for dividends, not for excitement.
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  Exactly. A sleeping giant.
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  But I've got this stack of documents on my desk, the SGX Group's results for
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  the first half of their 2026 financial year.
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  And, well, it feels like someone just poured a massive espresso shot into that
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  giant's coffee. It's more than just a jolt of caffeine, I'd say.
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  We're looking at the release from February 5th, and there's a lot of green on
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  these pages. And it's coming from some pretty surprising places.
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  So that's our mission for this deep dive. We're going through these docs,
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  the press release, the slides, the financials.
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  But from an investor's point of view, the big question is, is SGX still just
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  that you know, safe dividend stock? Yeah.
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  Or is there a real growth story starting to emerge here? That is the question, isn't it?
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  And just my one sentence reaction to the whole report, I'd call the results
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  resilient and surprisingly robust. Surprisingly robust. I like that.
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  Yeah, it really shows their whole multi-asset strategy is, well,
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  it's paying off. Okay, let's start with the big headline numbers then.
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  Let's talk profitability.
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  The bottom line in PAT, what are we looking at? It's strong.
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  If you look at the adjusted net profit attributable to equity holders,
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  or NPOT, which is the number that strips out all the one-off noise.
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  The real operating performance. Exactly.
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  That's up 11.6% year-on-year.
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  Sits at about S357.1 million dollars. Wow.
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  Okay. Double-digit profit growth. Yeah. You don't see that every day from a
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  big established exchange. You really don't. And the best part is how they got there.
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  This wasn't just some aggressive cost-cutting. It was driven from the top line.
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  It's a revenue growth. Yeah.
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  Net revenue, and this is excluding treasury income, that increased by 10.1% to $636.6 million.
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  Okay, so even if you include the treasury income, which I see dipped a bit,
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  total revenue is still up.
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  Still up 7.6%. This is the strongest half-year performance they've had,
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  and it's not one lucky break.
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  The growth is coming from almost all their businesses. It's a really broad-based lift.
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  All right, this brings me to the part of the report that, I mean,
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  it really made me sit up and pay attention.
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  The cash equities business. Ah, yes. The surprise.
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  For years, everyone's complained about liquidity in Singapore.
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  It's a ghost town, they say. But the numbers here tell a totally different story.
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  They do. The securities daily average traded value, what we call SDAV,
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  it rose 20 percent. 20 percent.
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  To S1.51 billion dollars.
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  That's the highest it's been in five years. That's incredible.
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  And I see here it's not just the big institutions.
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  The report says retail participation is at a four-year high.
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  So regular people are trading again.
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  They are. And that translates directly into the company's bank account.
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  Equities, the cash side, saw its net revenue jump 16.2% to almost $124 million.
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  So you've been listing revenues up. Up nearly 7%, which is a good sign.
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  But you have to ask, you know, why is this happening now? Right.
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  It can't be an accident? It's not.
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  A big part of this is a regulatory push. You have to look at the work of the
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  Equities Market Review Group, the EMRG.
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  EMRG. Sounds like a government agency from a spy movie. A bit, yeah.
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  But it's basically a task force that's been working on forward-looking measures
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  to, well, to revitalize the market, to make it a more pro-enterprise environment,
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  as they say in the outlook.
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  So they're trying to get more IPOs, cut the red tape. Exactly.
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  And that creates a narrative, a story that the market can get behind,
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  and it seems to be working.
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  Okay, so the stock exchange itself is waking up.
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  But STX isn't just about stocks anymore, is it? I mean, a huge chunk of their
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  business is this thing they call FICC. Right.
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  FICC. Fixed income currencies and commodities. This is their diversification engine.
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  Let's unpack that. Let's start with commodities. I see iron ore derivatives mentioned everywhere.
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  Why is a Singaporean exchange so dominant in, of all things, iron ore?
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  Well, because they've successfully positioned themselves as the global hub for
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  it. Think about all the construction, all the infrastructure being built across Asia.
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  That all needs steel. And steel needs iron ore. And the companies mining it
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  and using it need to hedge their price risk.
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  So they come to SGX and those volumes, they surged up 24.2 percent.
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  We're talking almost 41 million contracts.
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  Wow. OK, and then there's the C for currencies, the FX business.
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  The numbers here are, frankly, pretty staggering.
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  They are. The SGX FX average daily volume hit an all-time high of 180 billion U.S.
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  Dollars. Per day. Per day, up 32.3%. And again, think about the world we're
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  in. It's volatile. Right.
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  People and companies, they need to manage that currency risk,
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  they need to hedge, and more and more of them are doing it on SGX.
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  So in a way, global uncertainty is actually good for this part of their business.
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  It's a huge driver. And it shows the multi-asset strategy is working.
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  FICC revenue is up 12.5%, and
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  that segment now makes up over a quarter of their entire total revenue.
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  A quarter. So it proves they're not just relying on the stock market having a good day.
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  Exactly. They have multiple engines. Okay, but it can't all be good news.
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  I'm a natural skeptic. But it didn't go so well.
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  Where are the weak spots in this report? There are a couple.
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  If you look at equity derivatives, revenue there actually declined by 5.6%. Oh, interesting. Why?
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  I thought volatility was good for derivatives. It's about the mix.
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  The overall volumes were sort of flat, but they saw lower trading in some key
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  contracts, like the NICI 225 futures from Japan and the MSCI Singapore futures. Okay.
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  That was just barely offset by growth in their China A50 futures.
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  So it shows they're a bit at the mercy of where the action is in Asia on any given day.
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  Right. And I also saw a note about treasury income being down.
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  Yeah, that was down by nearly $10 million.
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  It's just a reflection of the global interest rate environment.
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  Not much they can do about that. And what about costs?
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  Were they spending a lot to get this growth? Expenses did go up,
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  but only by about 2.9 percent, mostly higher staff costs and professional fees.
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  But there is one thing you have to point out. The impairment.
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  The impairment loss, yes.
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  A $15.0 million hit on Goodwill, specifically related to their indices business.
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  So scientific beta, what does that mean in plain English? Did they overpay for an acquisition?
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  It's an accounting way of saying that specific acquisition isn't performing
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  as well as they had hoped when they bought it. it's a non-cash item,
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  so it doesn't affect the dividend today, but it is, you know,
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  a bit of a mark against their M&A track record.
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  A small blemish on an otherwise very clean report card. A good way to put it.
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  All right, let's get to the part that every income investor listening is waiting for.
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  The payday. The dividend. They really delivered here.
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  They declared an interim quarterly dividend of 11.0 cents per share. Which is a nice bump.
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  Up 2.0 cents from last year. So So for the first half, the total dividend is
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  up over 20 percent. 20.8 percent to be exact.
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  At 21.75 cents, it's a huge increase. It is. But there's a line in the outlook
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  section that's even more important for investors. It's basically a promise.
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  It's very specific guidance. You rarely see this.
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  They explicitly state their confidence in delivering, and I'm quoting here,
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  0.25 cents quarterly dividend increase until the end of FY 2028.
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  A quarter cent raise every single quarter for years. Yeah.
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  If you do the math, that suggests a compound annual growth rate,
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  a CAGR, of roughly 12% in the dividend.
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  That's a powerful statement to the market. It screams confidence.
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  It does. It signals they believe this new level of performance,
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  especially that high trading volume in the stock market, is sustainable.
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  So what's the plan to keep this momentum going? What's the CEO aiming for?
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  Well, the target is 6-8% medium-term revenue growth, and the plan is basically
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  to double down on what's working. The multi-asset strategy. Exactly.
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  One, scale the FX platform, get even more clients on board.
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  Two, broaden the derivatives offering with new products. And three,
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  keep accelerating the stock exchange business.
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  I also saw mention of a partnership with NASDAQ, the Global Listing Board.
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  Right. That's about bridging the U.S. and Singapore markets,
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  trying to make it easier for companies to access capital in both regions.
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  It's an interesting move to tackle the whole IPO issue.
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  So to sum it all up, what are the key takeaways for you?
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  I mean, you've got record revenue and profit. You have a surprising and very
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  welcome comeback in the local stock market.
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  Plus, continued dominance in their FX and commodities businesses.
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  And on top of all that, a very, very investor-friendly dividend policy with
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  clear guidance for growth. It's a compelling story.
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  It is. But I want to leave our listeners with one final provocative thought to chew on. Go for it.
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  The dividend growth is fantastic. It's predictable.
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  But it's all built on the assumption that this five-year high in stock market
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  liquidity is the new normal.
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  So the real question is, can they maintain it? Or was this six-month period
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  just a temporary blip, you know, a flash of optimism that might just fade away?
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  That's the gamble. Because in the exchange business, volume is everything.
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  We'll have to see if this sleeping giant stays wait for good. We certainly will.
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  Thanks for diving in with us today. Anytime. Thanks for listening.
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  This content is intended to serve strictly and only as an informational, independent.
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  Objective summary of recent events, and should in no way be interpreted,
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  construed, or relied upon by any party as inside information or financial advice.