Net profit for the July-to-September period stood at HK$2.95 billion, or HK$2.33 per share. This is better than an analysts’ estimate compiled by Bloomberg of a 26 per cent profit increase to HK$2.85 billion. Revenue increased 18 per cent to HK$5.08 billion, topping the consensus among analysts of HK$4.97 billion.
Earnings in the first nine months of the year rose 31 per cent year on year to HK$9.27 billion (US$1.18 billion), compared with HK$7.1 billion a year earlier. This is the exchange’s second best nine-month profit figure ever, only behind the HK$9.86 billion registered in 2021.
“Despite challenging global markets, these results reflect HKEX’s resiliency, the purposeful ongoing diversification of the business, our active management of costs and the team’s resolute focus on the execution of our strategy,” Nicolas Aguzin, HKEX’s CEO, said in a statement on Friday.
“The macro backdrop remains fragile, but the business is in good shape and is well-positioned to capitalise on slowly improving market sentiment,” he said. HKEX will continue to leverage its “unique China connectivity and continue to strengthen the attractiveness and competitiveness of our markets and our offering,” he added.
The city’s benchmark Hang Seng Index fell by 6 per cent last quarter, taking the losses in the first nine months of this year to 10 per cent.
HKEX shares rose as much as 2 per cent after the result were announced, overturning an earlier loss of 0.9 per cent. It closed 1.2 per cent higher on Friday at HK$286. The stock has declined by about 15 per cent this year.
The key growth driver was a sharp rise in investment income and interest income. HKEX booked a HK$1.18 billion net investment gain from its portfolio of global stock and bond investments in the first nine months, compared with a loss of HK$424 million a year earlier.
Hong Kong ranks ninth globally for IPOs as fundraising hits 20-year low
Hong Kong ranks ninth globally for IPOs as fundraising hits 20-year low
Higher derivatives trading also helped. Total derivatives trading rose 10 per cent in the first nine months to 739,000 contracts a day, while northbound bond transactions climbed 26 per cent to 40.5 billion yuan (US$5.53 billion) per day, HKEX said.
HKEX has introduced many trading products, including MSCI A Shares futures and exchange-traded funds, after Aguzin took over as CEO of the bourse operator in 2021. This diversification has helped HKEX fend off weak stock market performance.
The average daily trading turnover of the stock market rose almost 1 per cent year on year to HK$98.4 billion during the third quarter. It failed to halt a 12 per cent drop in the first nine months to HK$109.7 billion. This has meant that fee income was flat in the third quarter and dropped 13 per cent for the first nine-month period.
“We view the result to be mixed. Trading revenue is weaker than expected, but was offset by stronger investment income and better cost control,” said a Citi Research report released after the result result announcement.
“Market sentiments remain weak and could continue to weigh on core revenue performance in the fourth quarter, 2023. The policy address on Oct 25 could be key to watch, as the government may announce measures to improve market liquidity.”
HKEX achieved high net investment income this year following a series of interest-rate hikes in the US and local markets, said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
A total of 42 companies raised US$3.13 billion of proceeds from new stock offerings on the Hong Kong stock exchange’s main board from January to September, according to Refinitiv data, a 65 per cent slump from a year ago. It was the least since 2003, when the severe acute respiratory syndrome hit the city.