Japan Exchange Group’s Q2 Result Weaker on Higher Cost

Japan Exchange Group’s second-quarter result was weaker on higher operating expense as the wide-moat-rated exchange maintained its investments in its technology platform. Operating expense increase of 10.2% to JPY 33.2 billion against the same period last year outpaced revenue growth of 1.5% in the second quarter, resulting in a 5.6% decline in net income. There is no change to operating expense guidance of JPY 68 billion for the full year, but the exchange did lift its trading volume assumption for its derivatives division. However, this is subject to market conditions and we leave our forecast unchanged, which is 3% above guidance and is flat against last year.