SINGAPORE (Nov 5): The Singapore Exchange, suffering a drop in share price along with most of the 700 or so counters listed, has been exercising its share buyback mandate. The most recent purchase was made on Oct 30, when it bought 65,000 shares at $6.74 to $6.75 each. It had earlier made purchases on Oct 23, 25, 26 and 29. A total of 397,100 shares was bought at $6.91 to $7.04 each.
These purchases were made under the current share buyback mandate that took effect on Sept 29. The most recent share buyback made by SGX under the previous mandate was for 147,000 shares on Sept 13, at prices ranging from $7.27 to $7.31. Under the previous mandate, a total of 1,514,000 shares was bought back.
SGX is buying back shares amid an overall weakness in the market, and its price has been weighed down as well. Year to date, SGX shares are down 8.06% to close at $6.84 on Oct 31. At this level, the exchange is deemed to have a market capitalisation of $7.3 billion, and a price-to-earnings ratio of 20.18 times.
On Oct 19, SGX reported results for 1QFY2019 ended Sept 30. Earnings for the three months were $91.1 million, just a shade higher than the $90.7 million reported for the year-earlier period. Revenue in the same period was $208.9 million, up from $204.5 million the year before.
SGX plans to pay a higher interim dividend of 7.5 cents a share, significantly higher than the five cents paid in the year-earlier quarter. At this dividend rate, SGX is trading at a relatively high annualised yield of 4.75%, based on the Oct 31 closing price of $6.84. At this level, SGX’s dividend yield is the fourth-highest among all 30 component stocks of the Straits Times Index, which is delivering an overall yield of 4.1%. Singapore Telecommunications leads the pack with a yield of 5.54%, based on its Oct 31 closing price of $3.16.
SGX CEO Loh Boon Chye explains that the company was able to report steady earnings for the quarter — despite the ongoing market correction — as the exchange has in place a diversified and resilient multi-asset business. “We achieved strong record revenues in our derivatives business, while our securities market saw a pullback, along with other regional stock markets, amid heightened volatility and emerging-market weakness,” says Loh.
“During the quarter, we made strategic investments in companies that will enable us to expand our fixed-income business and pursue the development of our digital marketplace for freight.”
Nevertheless, a correction in the market has taken its toll. During the quarter, securities’ daily average value (SDAV), the key measure of the stock market’s vibrancy, declined 8% to $1.07 billion, down from the $1.16 billion generated in the year-earlier quarter. Total traded value dropped 8% y-o-y to $67.5 billion during the quarter, down from $73.2 billion in 1QFY2018. The traded value of equities fell 9% y-o-y to $61.1 billion, from $67.5 billion. Other products, including warrants, exchange-traded funds and American depository receipts, rose 12% y-o-y to $6.4 billion.
Since end-September, market conditions have worsened. The Straits Times Index dipped below the psychological 3,000-point mark on Oct 25, before closing at 3,012.84 points. That level has since been broken. On Oct 31, the index closed at 2,969.5 points — a 52-week low, with an SDAV of $985.4 million. The following day, a strong rebound occurred. The index closed at 3,018.9 points, down 11.29% year to date. SDAV that day roared back to $1.4 billion.
