HKEx Q3 profit climbs; Shanghai link launch date not known

[HONG KONG] Hong Kong Exchanges & Clearing Ltd (HKEx) posted a 6 per cent rise in third-quarter profit as trading volumes climbed ahead of a proposed trading link with Shanghai, but said it did not know when the delayed scheme would launch.

The world's second-largest listed stock market operator reiterated that while it had completed preparations, the scheme, seen as a milestone in the opening up of China's capital markets, had not received regulatory approval.

The launch had been expected on Oct 27 and the Hong Kong Securities and Futures Commission had also said it is ready. Charles Li, chief executive of the bourse, said last month he could not clarify which agency in Beijing is responsible for giving the green light.

Some market watchers believe the launch date might have been postponed due to China's dismay over pro-democracy protests in Hong Kong, which have paralysed parts of the financial centre.

Lack of clarity on how capital gains tax will be applied is also hindering the launch of the scheme, market professionals speaking at a Reuters China Summit said last week.

The bourse's net profit climbed to HK$1.28 billion (US$165 million) in July-September from HK$1.2 billion a year earlier, according a Reuters calculation from HKEx's statement on Wednesday.

It also hinted that it could scale back an aggressive fee hike on the London Metal Exchange, which it purchased in 2012. HKEx said last September it would hike fees by 34 per cent in January 2015, but in Wednesday's statement said the hike 'could be subject to minor revisions'.

Shares in HKEx have surged by nearly a third in value this year compared with a 2.6 per cent rise in the benchmark Hang Seng index on anticipation of the new link with Shanghai.

The trading link could boost the average daily value of trading on the bourse by around 38 per cent to HK$93 billion (US$12 billion) by 2015, according to estimates by BNP Paribas.

Under the scheme, international investors will be allowed to trade Shanghai 'A' shares via the Hong Kong stock exchange while mainland investors will be able to trade Hong Kong 'H' shares via the Shanghai Stock Exchange, subject to quotas both ways.

REUTERS