ASX earnings down

Australia’s main stock exchange sees revenues and profits down as market activity falls to cyclical lows

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Despite the ASX 200 Index (Index: ^AXJO) (ASX: XJO) rising around 15% in the last six months of 2012, the performance of the main stock exchange operator, ASX Limited (ASX: ASX) failed to tag along.

The ASX has reported a slight fall in net profit, down 2.5% to $171 million, as operating revenues fell 3.3%, for the six months to December 2012. CEO, Elmer Funke Kuppper said that trading activity continued to be near cyclical lows and well below the levels of the previous year. Average equity market activity fell to a low of $3.8 billion per day, down 24.5%.

Most divisions were hurt, with IPO activity again subdued with just 41 new listings compared to 57 in the previous corresponding period. Cash Market revenues, which includes trading, clearing and settlement, fell 18% to $54.9 million. Information Services and the Derivatives and OTC Markets both saw falls in their revenues, while Austraclear and Technical Services went against the trend, recording rises in revenues.

On a positive note, the second quarter saw a 2.8% rise in revenue, compared to a 8.8% fall in the first quarter, although the first seven weeks of 2013 trading activity was 4.2% below the previous year, offset by derivatives volumes, which rose 16.8%, and capital raisings which climbed 49% over the previous year.

Mr Funke Kupper said: “The recent economic and political news from the United States and Europe suggests that there is a greater level of stability, from which economic recovery becomes possible.”

While an immediate recovery in trading activity is unlikely, it does point the way for a gradual return of investor confidence, which should be good news for other companies dependent on market activity, like Computershare Limited (ASX: CPU), Iress Limited (ASX: IRE) and Advanced Share Registry (ASX: ASW).

Foolish takeaway

For income focused investors, the ASX declared an interim fully franked dividend of 87.9 cents, down 5% compared to last year. That equates to a potential dividend yield of around 5%, before franking, at current prices of around $35.87.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Computershare.

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