“HKEX demonstrated its strength and resilience in the first quarter of the year,” Bonnie Chan Yiting, its newly appointed CEO, said in a statement issued during the noon trading break on Wednesday.
“Despite a fragile global backdrop, the group’s derivatives and commodities business performed strongly – the former achieving record quarterly volumes.
“Whilst the cash market reflected broader macro sentiment and remained soft, there was a notable uptick in headline average daily turnover in March and April, indicating growing investor confidence.”
The HKEX chairman Laura Cha Shih May-lung will host her last annual general meeting this afternoon, before stepping down from the role she has held for six years.
The exchange’s new board of directors will immediately choose a new chairman amid market speculation that former Securities and Futures Commission chairman Carlson Tong Ka-shing is in line for the job.
HKEX’s shares closed 1.2 per cent higher at HK$233.6 at lunchtime on Wednesday ahead of the results announcement. They have declined 11 per cent this year.
The bourse operator blamed the profit decline on lower fee income after average daily trading turnover dropped 22 per cent year on year to HK$99.4 billion during the first quarter.
The city’s benchmark Hang Seng Index declined by 3 per cent in the first quarter after a drop of almost 14 per cent last year.
The bourse’s revenue also suffered from a 25 per cent decline in listing fees as a drought in initial public offerings (IPOs) continues.
Twelve companies raised HK$4.73 billion from first-time share sales in Hong Kong in the first quarter, a 29 per cent decline from a year earlier, according to data compiled by the London Stock Exchange Group. That is the least since the US$580 million generated in the second quarter of 2022 and the worst first-quarter performance in 15 years.
The bourse also reported a 3 per cent drop in net investment income and interest income. HKEX booked a HK$535 million net investment gain from its portfolio of global stock and bond investments in the first quarter, compared with a gain of HK$549 million a year earlier.
This was partly offset by increases in derivatives trading and turnover in the cross-border Stock Connect scheme.
Total derivatives trading rose 14 per cent in the first quarter to 855,000 contracts a day. The average daily turnover of the northbound channel of the Stock Connect rose 37 per cent to 133 billion yuan (US$18.36 billion) per day, while northbound bond transactions rose 22 per cent to 45.2 billion yuan per day, HKEX said.
Metal contracts trading at the London Metal Exchange, a wholly owned subsidiary of the HKEX, also rose 31 per cent year on year to 659,000 lots per day.
Brokers are optimistic about the outlook for the Hong Kong exchange.
“It is highly likely that the period of lowest trading activity has already bottomed out in the fourth quarter of last year,” Kenny Ng Lai-yin, a strategist at Everbright Securities International, said after the results announcement.
Since the beginning of 2024, average daily turnover has rebounded to the level of HK$96 billion, an increase of nearly 6 per cent from the fourth quarter of last year, and has also surpassed the level of the third quarter of last year, exchange data showed.