By Robert Swift
There is a curious sameness to the equity conversation this year. Roughly every second idea that crosses the desk is a variation on the same theme: chips, models, hyperscaler capital expenditure, the coming compute supercycle, and the breathless assumption that everything else in the market is now a rounding error. Some of this is fair. A great deal of capital is being spent, and some of it will earn a return. But an investor who only owns the story everyone agrees on is not really diversified. He is simply concentrated in the consensus.
So this week I want to spend time on two businesses that have nothing to do with artificial intelligence, sit in unglamorous corners of the world, and have quietly done the one thing the market claims to value most: they have kept compounding. One runs the plumbing through which capital changes hands. The other makes the machines that bend and cut metal. Neither will ever headline a technology conference. Both are worth understanding.
What actually matters here
The point of this piece is not that these two are cheap. They are not, particularly. The point is that quality, capital discipline and a genuine structural tailwind can carry a business a long way without a single mention of a graphics processing unit. When the fashionable trade is this crowded, the useful question is not “what else might go up as much as AI”, but “what can I own that behaves differently, earns real cash, and is run by people who respect their own balance sheet”.
Both names below pass that test. Both also come with the honest caveat that the market has already noticed, so the entry point demands more thought than it would have two years ago.
Singapore Exchange: the toll booth on Asian capital
Singapore Exchange (SGX: S68) is the closest thing a listed market gives you to a regulated toll booth. It is the only integrated securities and derivatives exchange in Singapore, and it earns money at almost every stage of the journey a trade takes: listing, trading, clearing, settlement, depository, market data and index services. When activity rises, SGX clips the ticket more often. When it falls, the depository, data and connectivity revenue keeps arriving regardless. That is a good kind of business to own.
The recent numbers make the case better than any narrative. In the first half of financial year 2026, the six months to 31 December 2025, SGX reported net profit after tax of S$342.7 million, with adjusted net profit up 11.6 per cent to S$357.1 million and adjusted earnings per share of 33.4 cents. Net revenue, excluding treasury income, grew about 10 per cent. Securities daily average traded value rose 19.5 per cent to S$1.5 billion, a five-year high, and total securities traded value climbed more than 20 per cent. Perhaps most telling after two thin years, SGX recorded 15 new listings against 5 in the prior period, raising roughly S$3 billion. The listings drought appears to be ending.
This followed a full year to June 2025 that was itself the strongest since the exchange listed in 2000, with record net revenue of S$1.30 billion, up 11.7 per cent, and adjusted profit of S$610 million.
Two things give the business its character. The first is the currencies and commodities franchise, and within it the over the counter foreign exchange platform, now among the top three exchange-backed venues of its kind globally. Fixed income, currencies and commodities net revenue rose about 12.5 per cent in the half. In a world of currency volatility and shifting trade flows, a neutral venue that helps global institutions manage risk is a structurally advantaged place to sit. The second is capital discipline. SGX has committed to a progressive dividend, raising the quarterly payout by 0.25 cents every quarter through to the end of financial year 2028, and lifted the latest interim dividend by 22 per cent. Management continues to guide to organic revenue growth of 6 to 8 per cent, excluding treasury income, over the medium term.
There is also a growth option that costs shareholders very little to hold. SGX is building a Global Listing Board with Nasdaq to bridge the United States and Singapore markets, has introduced Singapore Depository Receipts over Indonesian underlyings, and has added cryptocurrency perpetual futures. None of these needs to work for the base case to hold. If one or two do, they are upside.
Amada: the machines behind the machines
If SGX is the plumbing of capital, Amada (6113 JP) is the plumbing of manufacturing itself. The Japanese company is one of the world’s leading makers of metalworking machinery: laser cutting machines, press brakes, turret punch presses, band saws and the software and automation that increasingly ties them together. If a factory somewhere is bending, cutting or shaping sheet metal into an electrical enclosure, an automotive part or the steel frame of a building, there is a fair chance an Amada machine is doing the work. Its revenue is spread sensibly across the developed manufacturing world, with Japan around 35 per cent, the United States around 25 per cent and Europe around 20 per cent.
The structural driver is one of the least glamorous and most reliable trends in global industry: there are not enough skilled workers to bend metal by hand anymore, and there never will be again. Ageing workforces and chronic labour shortages in developed economies push manufacturers towards automation whether they like it or not. Amada does not just sell a machine; it increasingly sells an integrated cell, with laser cutting paired to automated loading, storage towers and robotic handling. That is a stickier, higher-value proposition than a standalone tool, and it lands squarely in the reshoring conversation that trade policy keeps reinforcing.
The most recent full year, to March 2026, showed the cyclicality plainly. Revenue rose about 10 per cent to ¥437.4 billion, but net income fell 5.7 per cent to ¥30.6 billion and the net margin slipped to 7.0 per cent from 8.2 per cent as costs rose faster than price. This is a capital goods business, and capital goods businesses breathe in and out with the industrial cycle. What separates the good ones is what they do with the cash in between. Here Amada is behaving exactly as a shareholder would hope. It has been buying back stock and, importantly, cancelling the shares rather than parking them, with a programme to repurchase about 18 million shares, roughly 5.6 per cent of capital, for around ¥20 billion. This is the practical face of the Japanese governance reform that has drawn so much attention: a company deliberately shrinking its share count to lift returns on equity, alongside a steady dividend.
The valuation, said plainly
This is where a little discipline is required, because neither of these is a bargain hiding in plain sight.
SGX has re-rated strongly over the past eighteen months and now trades at close to record levels, on a price to earnings multiple in the mid twenties, with a forward dividend yield approaching 3 per cent once the progressive payout steps up. That is a full, though not absurd, multiple for a dominant exchange with pricing power and a rising payout. Amada, having roughly doubled from its lows over the past year, trades on around 30 times earnings with a yield near 2 per cent, which is a demanding multiple for a cyclical machine tool maker in a soft-margin year.
So the honest framing is this. You are not being handed either of these at a distressed price. You are being offered two high-quality, structurally supported businesses, with genuine capital discipline, at prices that already reflect a good deal of that quality. For a long-term investor, the question is whether the durability and the compounding justify paying up, and whether they earn their place precisely because they do not move with the same crowd that owns everything else.
Risks
For SGX, the obvious risk is that trading volumes are cyclical. The strong first half rode a wave of market activity and a listings recovery, and both can fade. Treasury income is sensitive to the level of interest rates, so a sharp fall in rates would take some earnings with it. The valuation leaves little room for a disappointment, and the newer ventures in crypto and cross-border listings carry execution and regulatory risk even if they are small today.
For Amada, the risks are those of any capital goods business. Demand is tied to industrial investment cycles, which are slowing in parts of Europe and China. Margins are under pressure from costs, as the latest year showed. The yen adds a layer of currency translation risk for offshore earnings. And at roughly 30 times earnings in a year of falling profit, the shares are priced for a recovery that the cycle has not yet delivered. Buybacks support the equity, but they do not repeal the cycle.
TAMM Takeaway
The AI trade may well continue to work. That is not the argument here. The argument is that a sensible global portfolio should own more than one idea, and that the businesses which quietly keep the world’s capital and the world’s factories moving are worth a place alongside the fashionable names, not instead of them.
Singapore Exchange is a dominant toll booth on Asian capital flows, with a recovering listings pipeline, a growing foreign exchange franchise and a progressive dividend. Amada is a global leader in the machines that automation and labour shortages make increasingly essential, run by a management team that is cancelling its own shares to lift returns. Neither is cheap, and both should be judged on quality and durability rather than on the hope of a bounce. That, plus a reasonable and rising cash return, tends to do more for long-term wealth than chasing the next variant of the trade everyone already owns.
The unfashionable virtue in this market is not contrarianism for its own sake. It is simply owning good businesses that behave differently, and paying attention to the price.
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Disclaimer: Singapore Exchange Limited (SGX: S68) and Amada Co., Ltd. (6113 JP) are held in TAMIM portfolios as at the date of article publication. Holdings can change substantially at any time.
