Shares in stock exchange owner and operator ASX Ltd (ASX: ASX) continue to hold their ground despite the recent volatility in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
In fact, over the past month while the index has slumped nearly 4%, ASX Ltd has gained 2.5%.
It's certainly true that buoyant market conditions provide a tailwind for the ASX Ltd, not just because this usually encourages a higher level of trading amongst participants but because it also encourages new companies to list via initial public offering (IPO) and encourages firms to raise more capital and to undertake mergers and acquisitions (M&A) activity which all helps to boost revenues for the group.
Strong performance in October
- In the month of October, nine new listings on the ASX occurred including the IPO of retailer Baby Bunting Group Ltd (ASX: BBN).
- There were also four de-listings with two of these the result of takeovers.
- The total capital raising was $11.8 billion, an increase of 49% on the previous corresponding period (pcp).
- Trading volumes were higher in October 2015 compared with the pcp and were up 15% year to date compared with the pcp. Trading value was also higher over both time frames.
Positive outlook
Whilst buoyant market conditions provide momentum for ASX Ltd, a significant proportion of its revenues are recurring. This annuity-style revenue stream is a key defensive attribute for the entrenched market leader.
While the recent share price performance has been robust, any weakness brought on by general negative market sentiment could offer long-term shareholders a buying opportunity.
With consensus data showing earnings and dividends per share forecast to rise over the next two years, buyers today can acquire the stock on a 2017 price to earnings ratio and fully franked dividend of 18 times and 5% respectively.
