HKEX profit drops more than expected
The bourse said it will trim new projects and hire fewer people.
Hong Kong Exchanges and Clearing will slow “less critical projects” and hire fewer staff after reporting a worse-than-expected net profit decline of 9 per cent in the first quarter after turnover fell and running costs increased.
The bourse, which runs the local stock and futures market and owns the London Metal Exchange, said net profit for the period was HK$1.43 billion. Market expectations were for a 4 per cent drop.
“In response to continued uncertainty in market conditions the group is adopting a prudent approach to expenditure control as we move into the second quarter of 2016,” the HKEX said in its result statement. “While the group continues to move forward with strategic initiatives a more cautious approach is being taken in the timing of less critical projects,”
The bourse said this would include “a means to manage capital expenditure” and “a more modest increase in headcount” this year.
Ben Kwong Man-bun, a director of KGI Asia, said it made sense for HKEX to cut costs as turnover has been comparitively low this year and that has sliced into income.
“The HKEX will continue to expand in stock connect and to promote new listings as these would bring in new income,” he said. “But the bourse is likely to cut down on back-office hirings.”
Stock connect allows cross-border trade between the Hong Kong and Shanghai exchanges.