LME deal and poor market trade cut HKEx profit
Stock exchange operator blames the 20 per cent drop in income on the cost of taking over the London Metal Exchange and fall in trading fees
An expensive acquisition and poor market turnover contributed to Hong Kong Exchanges and Clearing's 20 per cent drop in net profit last year. Analysts say the outlook for the operator of the stock and futures markets is not optimistic.
The profit figure was at the lowest end of market estimates, leading to HKEx's shares falling to HK$135.60 - down 1.6 per cent - in afternoon trade before bouncing back to close unchanged on the day at HK$137.80.
"While the global economic outlook remains challenging, we believe we are well positioned to weather any storms that might come our way," chairman Chow Chung-kong said.
HKEx said net profit fell to HK$4.08 billion from HK$5.09 billion in 2011. This was because of lower market turnover, fewer initial public offerings and the £1.39 billion (HK$16.3 billion) takeover of the London Metal Exchange.
HKEx kept its 90 per cent payout policy with a final dividend of HK$1.46 per share.
The average daily turnover on the stock exchange fell 23 per cent to HK$53.9 billion last year, while funds raised from initial public offerings plunged 65 per cent to HK$90 billion. Trading fees and listing income are major sources of the HKEx's revenue.