Singapore Exchange (SGX) is Asia’s leading multi-asset exchange. Over the past financial year, SGX demonstrated robust strategic growth and resilience, capitalizing on its multi-asset strategy to further strengthen its leadership in Asia’s commodities and foreign exchange markets. This approach has enabled SGX to broaden its market presence and drive sustained growth across diverse asset classes. The exchange continues to show steady gains to both its revenue and profitability.
To gain deeper insights into SGX’s performance and future outlook, I attended the company’s 2024 annual general meeting. Here are eight key takeaways from this year’s AGM.
1. Stable revenue growth and profitability. SGX delivered steady financial performance in FY2024, with revenue increasing 3% year-on-year to over S$1,232 million. This growth was mainly fuelled by significant gains in the currencies and commodities segments, which surged by 23%, showcasing the success of SGX’s focus on high-growth areas within its multi-asset portfolio.
Adjusted net profit after tax climbed by 4.5% to S$526 million, reflecting disciplined cost management alongside revenue expansion. SGX’s gross debt-to-EBITDA ratio improved to 1.0x, underscoring its strong balance sheet and ability to leverage financial flexibility for strategic growth initiatives in the future. Management emphasized that this strong foundation enables SGX to continue investing in technology and product development, further reinforcing its stability and resilience amid market fluctuations.
2. Balanced revenue streams and multi-asset strategy. In FY2024, SGX maintained a diversified revenue mix. The Fixed Income, Currencies, and Commodities, Equity Derivatives, and Cash Equities segments each contributed approximately around 27% of total revenue. Platform and Others segment revenue accounted for 20%, highlighting SGX’s ability to manage fluctuations in cash equities and listing activities through a diversified multi-asset strategy approach that has allowed the exchange to effectively derisk its revenue streams.
3. Record over-the-counter (OTC) FX volume growth. SGX’s OTC FX business saw average daily volume (ADV) rise by 47% to US$111 billion, exceeding its US$100 billion target. This segment has maintained a 32% compound annual growth rate (CAGR) over three years, driving revenue to over S$90 million and now contributing 7.5% of SGX’s total income. SGX credits this growth to an expanding client base and new market-makers, with particularly strong performance in USD/CNH contracts. This success reinforces SGX’s position as a premier forex hub in Asia, addressing rising demand for hedging and risk management amid global volatility.
4. Strengthening the cash equities business. In the latter half of FY2024, the daily average value in securities trading increased by approximately 20%. Retail participation grew significantly, with investors purchasing a net S$2 billion in cash equities, a 140% increase from FY2023. New depository receipts, ETFs, and structured certificates, such as the U.S. Magnificent Seven, expanded SGX’s offerings in the equity market. This increase in products has allowed SGX to continue to strengthen its cash equities business driving the volume of securities being traded as well as providing users of the exchange with more optionality which is a core focus that SGX aims to provide.
5. Continued leadership in commodity derivatives. SGX maintained its leadership in commodity derivatives, with contract volumes increasing by 50%. Iron ore contracts, in particular, attracted greater interest from U.S. and European clients, enabling SGX to reach new trading volume records. SGX remains a leading marketplace for seaborne dry bulk freight derivatives and showed strong performances in rubber and dairy contracts. SGX CEO, Loh Boon Chye, also highlighted that they would continue to maintain its leadership in commodity derivatives in the future.
6. Investment in technology and market infrastructure. SGX remains committed to strengthening its technology and market infrastructure with FY2025 capital expenditures forecasted between S$70-75 million. This investment will support essential upgrades to SGX’s securities systems and enhance infrastructure across its trading and clearing platforms. With technology as a cornerstone of its operations, SGX aims to build a modern, resilient, and agile platform to accommodate future growth and drive efficiency gains. Management is targeting expense growth within a controlled range of 2-4% for FY2025 by balancing essential investments with disciplined expense management, ensuring that SGX can respond to market changes and operational demands without compromising financial health.
7. Expanded regional partnerships and connectivity. To broaden its regional reach, SGX has advanced several cross-border collaborations aimed at enhancing investor access to ASEAN markets. A key initiative is the Thailand-Singapore Depository Receipts Linkage, which promotes liquidity and allows investors to seamlessly access investment opportunities in both countries through depository receipts. Additionally, SGX has signed memorandums of understanding with the Indonesia Stock Exchange and the Vietnam Exchange. These partnerships are expected to strengthen SGX’s connectivity within ASEAN, expanding investment options for both global and regional investors, and fostering a more interconnected, liquid regional market.
8. Commitment to shareholder returns and dividends. SGX proposed a final dividend of 9 cents per share, an annual increase of nearly 6%. Bringing total dividends in FY2024 to 34.5 cents per share up from 32 cents in the previous FY. This aligns with its goal of mid-single-digit CAGR dividend growth over the medium term, emphasizing sustainable shareholder returns and reinvestment in core growth areas. The company remains committed to balancing dividend payouts with reinvestments into strategic growth areas. Management emphasized that SGX’s strong financial position enables it to continuously assess capital needs and adjust strategies, with the aim of driving both earnings and shareholder value over time.
The fifth perspective
In the past financial year, SGX showcased its financial resilience, strategic product expansion, and commitment to modernizing market infrastructure. With a focus on international growth, SGX continues to support a diverse set of market participants across asset classes, prioritizing cost efficiency and profitability. Through targeted technology investments, SGX is building a dynamic, efficient platform that meets the needs of all investor types. By striking a careful balance between shareholder returns and reinvestment, SGX is positioned for sustainable growth across core asset areas like FX, commodities, and equities, solidifying its role as a reliable exchange for investors seeking access to Asia’s economic potential.
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