By Selena Li
HONG KONG (Reuters) – The Hong Kong Stock Exchange posted its first profit increase in three quarters, reporting record turnover and revenue for the April-June period as IPO and trading activity improved.
Hong Kong Exchanges and Clearing (HKEX) net profit rose 9% year-on-year to HK$3.16 billion (US$405 million), on revenues up 7%.
The exchange said it benefited from higher trading and clearing fees as volumes increased in the spot, derivatives and commodity markets.
The HKEX has faced numerous challenges in recent years, from Beijing’s regulatory crackdown on a wide range of industries to rising tensions between the US and China and weak growth in the Chinese economy, all of which have contributed significantly to widespread dissatisfaction with Chinese assets.
The company’s share price has fallen about 15 percent since the beginning of the year and was down 1.9 percent in Wednesday afternoon’s session after the results were announced, as investors noted that a particularly weak quarter was followed by a strong second.
But new CEO Bonnie Chan said sentiment seemed to be improving.
“While uncertainties in the macroeconomic environment remain, we remain cautiously optimistic about the outlook for the remainder of the year,” she said in a statement.
IPO activity, which suffered from the massive sell-off in Chinese stocks in the first quarter, is now showing “signs of recovery,” said Chan, who took over the helm in March.
This was also helped by efforts by Chinese authorities to speed up the approval of IPOs, even though the transaction values were all relatively small and below US$500 million.
In the second quarter, 18 companies went public in Hong Kong, compared to 12 in the first quarter, raising around 80 percent more capital.
But some IPO initiatives have yet to get off the ground. A plan to make it easier for more specialized technology companies to go public has attracted only two companies since new rules were introduced a year ago.
The exchange also made efforts to increase the attractiveness of its derivatives offering and announced a major investment in April to develop its in-house derivatives platform.
(1 US dollar = 7.7906 Hong Kong dollars)
(Reporting by Selena Li; Editing by Edwina Gibbs)
