Australia's ASX Profit Is Up 35% on Strong Trading


ASX Ltd, operator of the Australian stock exchange, broadly met market expectations with a 35.4 percent rise in first-half profit on record revenues from its cash equities business.

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.
Ian Waldie | Bloomberg | Getty Images

Shares in ASX, like many other companies geared to the stock market, have been sold off in the past few weeks on investor concerns about a grim stock market outlook, as the global credit crisis makes access to funds more expensive.

"The performance of ASX in the first half of the financial year 2008 has been strong across the group's entire trading, listing, clearing and settlement, and market data activities," Chief Executive Robert Elstone said in a statement.

He said the pipeline of listing applications for the second-half remained robust, but was vulnerable to any slowing of domestic growth or business confidence.

ASX reported net profit of A$187.4 million (US$167.3 million) in the six months ended December, up from A$139.3 million reported a year ago. Nine analysts surveyed by Reuters on average had estimated ASX's profit at A$183.7 million, with forecasts ranging from A$174.1-A$193.1 million.

ASX's listing revenue rose 18.1 percent to A$66.6 million in the first half, with 177 new listings raising a total of A$42.2 billion. Cash market revenue climbed 32 percent to A$96.3 million, with ASX clocking a daily average turnover of A$6.5 billion.

The two segments account for about half of ASX's total revenues.

Australian shares set successive record peaks last year drawing more people into the market. But the global credit crisis unnerved investors and dimmed the outlook for markets, initial public offerings and other forms of capital raisings.

Already, the total amount raised via IPOs so far this year is down 36 percent from a year ago to $1.8 million, according to Thomson Financial, compared with $5.9 billion raised in 2007.

ASX's earnings follow a robust performance from Singapore Exchange, which last month reported a near doubling of its quarterly profit helped by strong trading.

Ongoing consolidation among stock exchanges has supported valuations of bourse operators' shares, but ASX has been largely left out of the action due to a 15 percent ownership cap set by the government.

"There is no doubt this consolidation trend will continue and ASX will keep evaluating its strategic development options, to supplement an already healthy organic growth outlook beyond fiscal 2008," Elstone said.

While recent market volatility has further boosted trading, analysts say activity levels could pull back if the downturn persists.

ASX shares edged up 0.2 percent to A$45.52 in early trade while the benchmark S&P/ASX 200 Index added 0.9 percent. The shares are down about 25 percent so far in 2008 compared with a 11.3 percent fall in the benchmark index.