Bourse operator HKEX’s third-quarter net profit surges 32pc on higher turnover and new listings

Average daily turnover rises 21 per cent to HK$82 billion in first nine months

PUBLISHED : Wednesday, 08 November, 2017, 1:19pm
UPDATED : Wednesday, 08 November, 2017, 11:27pm

Hong Kong Exchanges and Clearing on Wednesday reported a 32 per cent jump in third-quarter net profit on the back of rising market turnover and new listings.

HKEX, the local bourse operator and owner of London Metal Exchange, said that third-quarter profit stood at HK$2.03 billion (US$260 million), or HK$1.65 per share, up from HK$1.54 billion a year earlier.

The earnings beat consensus market estimates of a 16.5 per cent year on year growth in net profit to HK$1.79 billion for the third quarter, according to analysts polled by Bloomberg.

The company is on track to achieve a full-year net profit increase of 22 per cent to HK$7.04 billion in line with market estimates.

“Market sentiment continued to improve in the third quarter of 2017 with cash market headline average daily turnover rising to HK$93.2 billion, 20 per cent above the second quarter of 2017,” the stock exchange said in a statement accompanying the results.

“Stock Connect’s trading volumes continued to increase and reached record quarterly highs, with northbound and southbound average daily turnover being 11 per cent and 28 per cent higher than the second quarter. However, market volatility remained low adversely impacting derivatives volumes.”

For the first nine months this year, the exchange reported net profit of HK$5.5 billion, or HK$4.51 per share, a jump of 22 per cent compared with a year earlier.

Selfies and ceremony as the Hong Kong stock exchange’s floor trading hall closes for good

Revenue and other income surged 13 per cent in the first nine months to HK$9.66 billion, while expenditure rose 3 per cent to HK$2.59 billion.

The growth was driven by a rise in average daily turnover in the first nine months to HK$82 billion, up 21 per cent from a year earlier. That brought higher fees to the exchange.

Listing fee income also increased 6.6 per cent to HK$603 million as the first nine months saw 114 new companies list, compared with 75 in the same period last year.

The revenue growth was because of an increase in net investment income of HK$625 million and a one-off receipt of HK$55 million in interest from Lehman Brothers’ liquidators. Excluding the one-off items, revenue increased by 6 per cent.

The strong performance in securities market was offset by a decrease in fee income from derivative and commodities trading fee income. Derivatives trading for the nine-month period was down 10 per cent. Turnover of metals contracts on the London Metal Exchange was up 1 per cent but the trading fee income slipped 8 per cent in the first nine months this year because of fee reductions for some contracts.

Stock Connect brought in revenue of HK$277 million in the first nine months, up from HK$117 million a year earlier. The scheme tied up Hong Kong and Shanghai stock markets for cross-border trading in 2014 and added Shenzhen in December last year.

Shares of HKEX were up 2 per cent at HK$233 on Wednesday morning before the results were during the lunch break.