Derivatives Trading Boosts HKEX Profit Growth Amid Regulatory Changes

HKEX Reports Earnings Growth Driven by Derivatives Trading

Hong Kong Exchanges and Clearing Limited (HKEX) has announced its first earnings growth in three quarters, primarily fueled by a resurgence in derivatives trading and initial public offerings (IPOs). The net profit at the operator of the world’s fourth-largest stock market rose 9 per cent to HK$3.16 billion (US$405 million), or HK$2.49 per share, in the three months ended June, aligning with market estimates.

A Resilient Capital Market Amid Regulation Changes

Sales increased 8 per cent to HK$5.4 billion during the quarter, also meeting analysts’ forecasts. The quarter stands as HKEX's most profitable since March 2023, marking an auspicious start for Bonnie Chan Yiting, who took over as HKEX’s chief executive in March this year. Carlson Tong Ka-shing, a veteran accountant, assumed the role of chairman on April 24.

• HKEX shares dipped 0.4 per cent to HK$231 at the noon trading pause before the earnings report.
• The stock has fallen by 14 per cent this year, reflecting market volatility.

Chan commented on the performance, stating, “HKEX had a robust first half, with the second quarter seeing an upswing in market momentum and trading activity, driving record revenues and profits.”

IPO Activity and Trading Volume Spike

Fundraising activity showed resilience, with the second quarter witnessing a 50 per cent quarter-on-quarter increase in new listings and a 79 per cent rise in IPO funds raised. Increasing IPO activity led to enhanced fees for the exchange operator, with a 7 per cent increase in fee income during the quarter. The average daily trading turnover rose 18 per cent year-on-year to HK$102.7 billion, a gain of 22 per cent from the first three months of the year.

Hong Kong’s capital market, which faced a bear market for three years during the Covid-19 pandemic, experienced a significant boost in mid-April, following five stimulus measures from China aimed at supporting qualified industry leaders in raising funds in Hong Kong.