(08-12-2013, 04:07 PM)Nick Wrote: [ -> ]If you don't mind sharing, do you think SGX can continue to grow its profits at reasonable levels in the current decade ?
(Not Vested)
Let me give my 2cts worth on this question.
First and foremost, SGX is a company exposed to the financial sector of the economy. It has similar characteristics with other financial stocks like banks - ie. it's long term growth trajectory most probably tends to track that of the local+world economy. Because of its unleveraged nature and smaller exposure to credit, it does suffer less boom/bust than other financial stocks like banks.
Although SGX has no competition locally, it should be noted that it is not written in rule that a 2nd exchange cannot setup shop by applying to MAS for a license. So technically, a 2nd competitor can set up shop locally although it remains to be seen whether it is profitable enough for anyone to want to do so. So the competition for SGX is GLOBAL in nature. The worldwide exchange business is immensely competitive for IPOs and derivative trading. Been an operator in a small country, it will not be able to attract the truly big boys (eg. Alibaba lists U.S as an alternative listing avenue than HKEX, while Prada, an italian company listed itself on HKEX). The last big catch by SGX was HPT, and not alot of investors have fond memories to date. A recent potential big catch would be F1, but it does not bode well that Bernie has delayed the listing for some time already.
That said, on the global front, SGX is now targeting to be the Asian clearing house of choice and supermarket for asian derivatives. On the local front, it targets to increase retail participation. In the aftermath of GFC2008, one initiative was that all derivatives trading must be cleared by a counterparty and SGX is working to position itself with technology upgrades, getting qualified under Basel III and pumping up capital for SGX-DC etc etc. In retail participation, small moves like setting up trading competitions and working with academic institutions to increase investment knowledge has been made. There remains bigger efforts like strengthening the regulatory structure/enforcement or reducing minimum lot size that are in the pipeline.
In summary, I would say Magnus Bocker has positioned the company's objectives correctly and execution would now be the key, to answering whether
'SGX can continue to grow its profits at reasonable levels in the current decade'.
As i do not wish to risk to look stupid in the future by making a firm stand here, i would just end with a probabilistic motherhood statement
: As of current - the initiatives look good and all indicators are pointing to a growing derivative and clearing business although the recent penny stock saga seems to have blown a hole in the increasing retail participation statistics. How it executes its various plans in the pipeline and continuing to build trust (well, alot of people who kenna burnt from s-chips would twitch an eye) between regulators and customers would be key.
(vested)
*Side note: Mr Bocker's hairline was visibily receded and he is also getting thinner compared to 3 years ago when he took up the job. Is that an indication of how stressful and demanding the job is?