HKEX's income falls 3pc amid tech clamp

Finance | Bloomberg and Victor Zhong 28 Oct 2021

Net income at Hong Kong Exchanges and Clearing (0388) fell 3 percent to HK$3.25 billion in the three months through September from a year earlier amid China's crackdown on a broader range of sectors which triggered delays of major initial public offerings.

For the first nine months of the year, it recorded a 15 percent rise in net profit to HK$9.86 billion.

"HKEX had a strong first nine months of 2021, despite a turbulent macro backdrop," said Nicolas Aguzin, the exchange's chief executive, in a statement.

Investment sentiment was clouded as China's scrutiny over everything from technology to online tutors and real estate spurred a selloff that at its extreme wiped more than US$1 trillion (HK$7.8 trillion) from the value of Chinese stocks globally.

To that end, the amount raised in HK IPOs slid 40 percent in the quarter from a year earlier, though the bourse said that it raised a record HK$286 billion in the first nine months. Trading, clearing and settlement, data and overall listing fees all climbed.

But, Augzin said in an online conference that the bourse had over 200 IPO applications on the main board at the end of the third quarter, one of the highest levels ever.

Meanwhile, the exchange's introduction of MSCI A50 futures, a long-awaited alternative for hedging Chinese stocks versus rival Singapore, may boost earnings prospects. Credit Suisse estimated that HKEX's new product will contribute about 2 percent to its total revenue by 2023, as historically a new contract takes six to 12 months to build up liquidity.

Hong Kong shares closed lower yesterday, dragged down by technology and healthcare firms. The Hang Seng Index fell 1.6 percent to 25,628.74 points, while the Hang Seng Tech Index closed 3.19 percent lower at 6,441.62 points.

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