HKEx shareholders benefit from commodities and new listings

First-quarter profit boost comes amid doubling in IPOs and 7pc rise in take from metals trading

PUBLISHED : Friday, 09 May, 2014, 1:14am
UPDATED : Friday, 09 May, 2014, 2:17am

Hong Kong Exchanges and Clearing, which operates the city's stock and futures markets, reported its profit attributable to shareholders gained 2 per cent in the first quarter. The result was aided by rising fee income from commodities trading and an increase in the number of new listings.

The exchange yesterday said profit for the three months to March stood at HK$1.18 billion, up from HK$1.16 billion a year earlier.

The growth was driven by a 5 per cent annual increase in revenue to HK$2.34 billion, which offset a 10 per cent increase in expenses to HK$734 million.

"The higher income reflects increased fees from commodities trading, and additional listing fees," the exchange said in a statement. HKEx bought the London Metal Exchange, the largest metals bourse in the world, in December 2012.

Average daily trading turnover on the LME of nickel contracts was up 42 per cent during the quarter, zinc rose by 8 per cent and copper increased by 9 per cent, pushing HKEx commodities revenue 7 per cent higher on the year in the first quarter to HK$315 million.

HKEx also benefited from new listings, which doubled to 20 in the first quarter, with funds raised up 463 per cent to HK$46 billion. Average daily turnover on the main board fell 5 per cent to HK$55.1 billion.

Ben Kwong Man-bun, director and head of research of KGI Asia, said the results were in line with market expectations and that he was cautiously optimistic on HKEx's full-year profit.

"The stock through train scheme to be implemented in October for cross-border trading of stocks by mainland and Hong Kong investors would help to bring in higher turnover, which would boost its income," he said.

Kwong said the HKEx plan to introduce four new commodity contracts in the second half of this year, might also bolster income, but more promotional work would be required.

HKEx made a provision of £200,000 (HK$2.63 million) during the first quarter for legal costs in a case between the LME and Russian aluminium giant Rusal over changes to the former's warehouse policies.

A British court ruled in favour of Rusal, although the LME said it would appeal against the decision. The court had ordered the LME to pay that amount to Rusal.