Hong Kong exchange profit down 20%, challenges to persist: CEO

Published Thu, Feb 23, 2023 · 01:16 PM

The profit attributable to Hong Kong Exchanges and Clearing Ltd (HKEX) last year fell to HK$10.078 billion (S$1.71 billion) from HK$12.53 billion in 2021, according to its earnings results. PHOTO: BLOOMBERG

HONG Kong’s bourse operator on Thursday reported a 19.6 per cent drop in profits for 2022 as fee income took a hit from rising rates while geopolitical tension curbed trading and listing activities.

The profit attributable to Hong Kong Exchanges and Clearing Ltd (HKEX) last year fell to HK$10.078 billion (S$1.71 billion) from HK$12.53 billion in 2021, according to its earnings results.

That was still better than the average forecast of HK$9.92 from 27 analysts compiled by Refinitiv.

Core revenue of the bourse in the quarter dropped by 9 per cent to HK$18.37 billion from HK$20.1 billion in 2021, dragged down by weaker cash market turnover resulting from tighter market liquidity and sluggish trading.

“The broader challenges of 2022 will likely persist into 2023 – inflationary pressures, geopolitical tensions, economic malaise, and the lasting effects of the Covid-19 pandemic,” Nicolas Aguzin, CEO of HKEX, said in a release.

“However, the longer-term opportunities are still there.” The last month of 2022 saw 21 new listings on the bourse, accounting for about a quarter of total listings in the year, according to Aguzin.

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Meanwhile, trading volumes on the bourse decline last year.

Average daily turnover was HK$109 billion, down 26 per cent from HK$146.6 billion in 2021, which had been a record year for equities trading.

China’s economic slowdown, a sweeping regulatory tightening that hampered large enterprises’ fundraising outside mainland China, and geopolitical tensions have all resulted in a bleak year for new listings in Hong Kong.