MARKETS SPECTATOR: ASX Ltd ticks the yield box

ASX Ltd's results mirror the rebound in the benchmark index and even market volatility looks unlikely to shake its earnings strength.

A rising market lifts many boats, including ASX Ltd. At 1123 AEST ASX was up 36 cents, or 1 per cent, to $37.97 after the operator of the Australian stock and derivatives market said its revenue in the three months to March 31 rose 9.5 per cent to $152.3 million.

The value of the daily average trading volumes for February and March has been well over $5 billion, an improvement from January where it was barely $4 billion and December where it was under $4 billion despite signs the S&P/ASX 200 Index was on a tear.

The turnaround in ASX Ltd’s business is reflected across all its business units. In the three months to March all reported revenue increases. Derivatives revenue, which accounts for almost a third of ASX Ltd’s sales, rose 15 per cent to $50 million. Cash market revenue rose 2.4 per cent to $29.2 million. Listing and issuer services gained 12 per cent to $31.9 million.  

Such is the improvement in the ASX Ltd stock price, its shares have gained 25 per cent in the last 12 months. That is, market value as of March, $6.3 billion, was bigger than the London and Singapore exchanges.

If the S&P/ASX 200 Index, up 17 per cent in the last 12 months, exhibits signs of volatility, ASX Ltd’s earnings are likely to remain robust. Individual investors, who make up about a third of all ASX Ltd trading, seem to have cast off their disillusion with stocks following the market’s bull run. Superannuation fund inflows, which will increase from July 1 as mandatory contributions into the scheme increase, will underpin market activity.

Moreover the ASX Ltd’s yield, now about 5 per cent, is perhaps safer than the banks. The ASX is essentially a monopoly. In a market where yield is king, the ASX is ticking the right box as its fundamental business improves.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles