The owner and operator of the Australian Stock Exchange, ASX Ltd (ASX: ASX) has been a bit of a disappointment to shareholders from a price point of view over the past five years.
While the S&P/ASX 200 (INDEXASX: XJO) has gained 14.4%, the ASX Ltd is up just 2.5%. In comparison, two of the ASX Ltd's peers – companies which are also closely linked to trading volumes and equity market levels – have not only outperformed the ASX Ltd but also the index.
Those peers, leading share registry and investor services firm Computershare Limited (ASX: CPU) is up 15.3% in the last half decade; while trading software and wealth management systems provider Iress Ltd (ASX: IRE) is up 18.7%.
The lacklustre performance could have some investors questioning whether the ASX Ltd has lost its mojo. Here are four reasons to be positive about the exchange's future.
- The financial results for FY 2014 were positive with the group achieving record revenues and earnings. Revenue was up 6.6% to $658.3 million, net profit after tax was up 10% to $383.2 million and dividends were up 4.6% to 178.1 cents per share.
- The Initial Public Offering (IPO) market was strong in FY 2014 with companies raising $28 billion. In dollar terms, IPO revenue was the largest contributor to growth for the group. That trend looks set to continue in FY 2015 with a number of IPOs having either already occurred or set to take place.
- The ASX continues to innovate and expand its offering thereby maximising the usage of its exchange assets. One recent development has been the creation of a platform called mFunds which allows investors to buy and sell units in managed funds – the ASX already has 61 funds on mFunds!
- Last week, ASX Ltd proposed to invest $65 million in Yieldbrokers in return for a 49% shareholding. Yieldbrokers is a firm that operates an electronic market for around 800 Australian and New Zealand debt securities and interest rate derivatives. This acquisition is another step in the growth direction for the exchange and its shareholders.
