HKEX third-quarter profit tops market consensus on higher investment income, derivatives trading volume

Higher investment income offsets lower fees from fewer stock listings and weak stock market turnover

Net profit for the July-to-September quarter rises 30 per cent to HK$2.95 billion, or HK$2.33 per share

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The Connect Hall insde the Hong Kong stock exhcange in Central. Photo: Jonathan Wong

Published: 12:37pm, 20 Oct 2023Updated: 4:41pm, 20 Oct 2023

Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock market by capitalisation, reported a 30 per cent profit growth in the third quarter, with a substantial rise in investment income and derivatives trading business offsetting the negative impact of fewer new listings.

Net profit for the July-to-September period stood at HK$2.95 billion, or HK$2.33 per share. This is better than an analysts’ estimate compiled by Bloomberg of a 26 per cent profit increase to HK$2.85 billion. Revenue increased 18 per cent to HK$5.08 billion, topping the consensus among analysts of HK$4.97 billion.

Earnings in the first nine months of the year rose 31 per cent year on year to HK$9.27 billion (US$1.18 billion), compared with HK$7.1 billion a year earlier. This is the exchange’s second best nine-month profit figure ever, only behind the HK$9.86 billion registered in 2021.

Nicolas Aguzin , CEO of Hong Kong Exchanges and Clearing, seen during media briefing in Central in February 2023. Photo: Jonathan Wong

“Despite challenging global markets, these results reflect HKEX’s resiliency, the purposeful ongoing diversification of the business, our active management of costs and the team’s resolute focus on the execution of our strategy,” Nicolas Aguzin, HKEX’s CEO, said in a statement on Friday.

“The macro backdrop remains fragile, but the business is in good shape and is well-positioned to capitalise on slowly improving market sentiment,” he said. HKEX will continue to leverage its “unique China connectivity and continue to strengthen the attractiveness and competitiveness of our markets and our offering,” he added.

The city’s benchmark Hang Seng Index fell by 6 per cent last quarter, taking the losses in the first nine months of this year to 10 per cent.

HKEX shares rose as much as 2 per cent after the result were announced, overturning an earlier loss of 0.9 per cent. It closed 1.2 per cent higher on Friday at HK$286. The stock has declined by about 15 per cent this year.

The key growth driver was a sharp rise in investment income and interest income. HKEX booked a HK$1.18 billion net investment gain from its portfolio of global stock and bond investments in the first nine months, compared with a loss of HK$424 million a year earlier.