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HKEX sets profit record after IPOs and turnover surge

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Mr Li said in a statement that the outlook for 2019 is more challenging.

Hong Kong

HONG Kong's stock exchange operator on Wednesday said 2018 profit surged 26 per cent to a record high, meeting expectations, boosted by fees from a number of mega IPOs in the first part of the year as well as clearing fees and strong trading.

Net profit reached HK$9.31 billion (S$1.60 billion) from HK$7.4 billion a year prior, Hong Kong Exchanges and Clearing Ltd (HKEX) said in a bourse filing.

That compared with the HK$9.36 billion average of 16 analyst estimates compiled by Refinitiv, and beat the previous record of HK$7.96 billion set in 2015.

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In the filing, chief executive Charles Li and chairman Laura Cha said the outlook for 2019 was more challenging.

"We are entering 2019 with more geopolitical and economic uncertainty than has been the case for many years," Ms Cha said.

The result comes after HKEX revised its listing regime as it sought to increase its competitiveness over other financial centres following the loss of big Chinese names to New York.

Since April, HKEX has allowed IPOs by companies with dual-class share structures and biotech startups without revenue, and eased requirements for overseas-listed Chinese firms to have a secondary listing in Hong Kong.

So far, just smartphone maker Xiaomi Corp and online food delivery-to-ticketing services provider Meituan Dianping have listed two share classes, in Hong Kong's second- and third-largest IPOs last year, raising US$5.4 billion and US$4.9 billion respectively.

A number of biotech startups have conducted initial public offerings (IPOs) under the new rules.

Partly driven by these IPOs, Hong Kong topped global financial centres for IPO volume in 2018, Refinitiv data showed. HKEX's revenue from listing fees rose 63 per cent to HK$822 million, while trading fees rose 64 per cent to HK$2.5 billion as trading turnover hit a record high.

Also last year, the average daily volume of metals contracts traded on HKEX-owned London Metals Exchange rose 5 per cent to 630 thousand lots. The bourse operator will announce a three-year strategy on Thursday, in which it is widely expected to set out plans to continue broadening its focus away from equity trading.

"We intend to transform ourselves from being a leading global exchange not only by virtue of our size, but also in terms of our product range, reach, global relevance, regulatory standards, market efficiency and technological innovation," said Mr Li in Wednesday's statement.

Last week, HKEX announced the formation of an international advisory council including Stuart Gulliver, former group chief executive of HSBC Holdings PLC , Joe Tsai, executive vice chairman of Alibaba Group Holding Ltd, and Mary Schapiro, former chair of the US Securities and Exchange Commission.

It also said it would buy a majority stake in Chinese fintech firm Ronghui Tongjin Technology to bolster its technological capabilities in financial markets. REUTERS