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ASX Ltd – Strong growth in trading volumes

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

ASX Ltd operates the Australian Stock Exchange (ASX) and the Sydney Futures Exchange (SFE), offering a full suite of services including listings, trading, clearing and settlement. The ASX Ltd operates largely as a monopoly business. ASX Ltd’s market capitalisation is around A$16 billion.



What are ASX Ltds’s year-to date activity figures?

ASX Ltd announced today that in the ten months to end-April 2020 the number of trades on the ASX increased by 34% and the total value of trades increased by 29% while the number of trades in futures and options contracts on the SFX are up by 6%.

This is important because growth trading volumes drives growth in ASX Ltd’s earnings. That said, trading volumes are typically high when there is increased market volatility as has been the case in recent months. Once market volatility drops, trading volumes will most likely drop to more normal levels.

ASX Ltd also announced today that the total number of listed entities on the ASX fell to 2008 at end-April 2020 compared with 2068 at end-April 2019. This drop has a small negative impact on ASX earnings.

Further, ASX Ltd announced that in the ten months to April 2020 companies have raised $63.7 billion is capital compared with $73.7 billion in the corresponding period last year (a fall of 14%). However, $13.8 billion in new capital was raised in April 2020, up 185% from April 2019. This reflects a number of large corporates raising new capital in April 2020 to strengthen their balance sheets due to the impact of COVID-19 on economic activity.

What is the market’s reaction to ASX Ltd’s announcement?

ASX Ltd’s shares are down slightly in a weaker overall market. ASX Ltd is currently trading at $83.22 compared to a 52 week high of $89.67 in February 2020. This represents a fall of 7.2% compared with a 25% drop in the ASX200 in the same period. ASX Ltd trades on a forward PE ratio in the low 30s and a dividend yield of around 3% (fully franked).


This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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