HKEX profit rises but trading turnover slides

Business | Avery Chen 15 Aug 2019

The first-half net profit of Hong Kong Exchanges and Clearing (0388) rose 3 percent year-on-year to HK$3.21 billion, with basic earnings of HK$4.16 per share.

It declared an interim dividend of HK$3.72 per share, which is 90 percent of the net profit. Revenue for the first six months grew 5 percent year-on-year to HK$8.58 billion.

However, the average daily turnover in Hong Kong's securities market fell 23 percent year-on-year to HK$97.9 billion and the average daily volume of futures and options trading in the derivatives market declined 4 percent to 1.18 million contracts.

Chief executive Charles Li Xiaojia said the increasing volatility and shrinking turnover in the market are affected by external factors such as the Sino-US trade war and the Federal Reserve's monetary policy.

While Hong Kong protests have limited impact on market operations, trading in the stock exchange is in order and the trading system remains safe and stable, he said.

However, he said if the political chaos persists, Hong Kong's long-term economy will suffered.

"If we find that we are getting further away from what we want, and closer to the last thing we need," people should stop and understand young people's thinking to see if they can work together to achieve their goals, he said.

Li said HKEX's three-year strategic plan will not be affected by the social movement. He also expressed the hope that Hong Kong would return to a rational society.

The initial public offering funds raised in the first six months totaled HK$71.8 billion, up 39 percent year-on-year. However, there was a fall in the number of new listing applications and an increase in withdrawn cases.

ESR Cayman and Budweiser Brewing Company APAC canceled their mega IPO plans in the first half. Li said the cancellation was affected by the market situation, not political issues. He hoped the company will list in Hong Kong in the future and believes US-listed tech giants like Alibaba will "come home."

Li said HKEX has reached consensus with two mainland Chinese exchanges on the criteria for Hong Kong-listed companies with weighted voting rights to be included for the first time in Stock Connect southbound trading. Two companies with WVR will be added to the stock connect in the short term.

HKEX is working with Tencent (0700), Industrial and Commercial Bank of China, Hillhouse Capital and investment from businessman Adrian Cheng Chi-Kong to set up a joint venture which has been granted a virtual banking license but Li said the bourse operator would only be a shareholder and not participate in the venture's operations.

Shares of HKEX rose 0.51 percent to HK$235.2 yesterday.

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