Singapore Exchange, Asia's second-biggest listed bourse, gave a bullish outlook after posting a lower-than-expected 35 percent jump in quarterly profit as investor appetite for stocks and derivatives recovered.
"The market outlook continues to improve. Our IPO pipeline is strong and we expect continued interest in capital raising," SGX CEO Magnus Bocker said in a statement.
Bocker, a former president of OMX Nasdaq, is trying to introduce new financial products such as commodity derivatives to boost volumes as the exchange lags Hong Kong in attracting large listings.
Besides newly launched fuel oil and gold contracts during the fiscal third quarter, SGX has also announced plans to roll out more Indian equity derivatives and STOXX Index contracts to draw more market participants from Singapore and abroad.
IPOs in Singapore, which had dried up during the financial crisis, are making a comeback -- the latest being China's New Century Shipbuilders' plan to raise as much as $700 million in a Singapore IPO.
SGX, which ranks behind Hong Kong Exchanges & Clearing, earned S$74.6 million ($54.33 million) in the three months ended March 31, up from S$55.3 million in the year-ago quarter.
Four analysts polled by Reuters had an average forecast of S$81 million.
SGX, which enjoys high operating margins and a successful derivatives business, said net profit margin improved two percentage points to 48 percent in the third quarter.
Securities market revenue rose 65 percent on higher turnover from a year earlier, while derivatives revenue inched up 2 percent as higher futures and options revenue was offset by a fall in revenue from clearing structured warrants and income from the management of margin funds.
But operating expenses rose 17 percent to S$63.6 million mainly due to provisions for higher variable bonuses and an increase in technology-related costs.
Bocker warned that operating expenses will continue to rise in the coming quarters.
SGX trades at a forward price-earnings multiple of around 24, compared with about 27 for the Hong Kong bourse and 17 times for ASX, the region's number three.
Shares of stock market operators have been lacklustre this year after sharp gains in 2009 when markets recovered from the depths of the financial crisis.
Shares of SGX are down about 0.8 percent this year, better than the around 3 percent fall in the shares of the region's No. 3 listed bourse, Australia's ASX, and the 1.5 percent drop in the Hong Kong bourse's share price.