Hong Kong stock exchange operator HKEX posts record US$1.6 billion profit for 2021 as daily turnover soars
Hong Kong Exchanges and Clearing (HKEX), which operates the third largest stock market in Asia, posted record annual profit for a fourth consecutive year as brisk trading lifted revenue and earnings to record highs.
The bourse operator posted a 9 per cent increase in net profit to HK$12.54 billion (US$1.6 billion) for 2021, or HK$9.91 per share, according to anexchange filing on Thursday. Earnings trailed consensus forecast for a 14 per cent increase, according to analysts tracked by Bloomberg.
"HKEX had a strong year in 2021, despite a turbulent macro backdrop and the ongoing pandemic," chief executive Nicolas Aguzin said in the filing. "Revenue and profit both reached record highs." He will hold a media briefing later Thursday.
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HKEX has benefited from strong market turnover, which offset low investment income, said Aguzin, the former JPMorgan Chase banker who took over the rein at the exchange in May 2021. HKEX is well positioned as a super-connector to play an increasingly important role in the fast-evolving global capital markets, he added.
The stock declined 4 per cent to a one-year low of HK$399.60 at local noon trading break and before the results were announced.
Revenue grew 10 per cent to an all-time high of HK$20 billion last year, the company said. The growth stemmed mainly from higher trading and clearing fees on the back of a 29 per cent increase in average daily turnover to HK$166.7 billion.
Daily turnover via the northbound channel of the Stock Connect, a link allowing international investors to trade in Shanghai and Shenzhen-listed shares, rose by almost a third to 120.1 billion yuan (US$19 billion). Mianland Chinese investors traded HK$41.7 billion of Hong Kong-listed shares per day via the southbound channel, a 71 per cent jump over 2020.
The rise in trading and clearing fees offset a decline in new stock offerings in the city. Proceeds from 98 initial public offerings (IPOs) fell 17 per cent to HK$331.4 billion, the first decline since 2017.
The city has been the largest IPO market worldwide in seven out of the past 13 years. However, since Beijing started undertaking a range of regulatory reforms in July to crackdown on technology companies and private tutoring businesses, new listings have slowed down, particularly in the fourth quarter of 2021.
There has been no improvement this year. Just six IPOs had been completed as of February 18, raising a combined US$1.1 billion, according to Refinitiv data. Twenty IPOs generated US$8.6 billion proceeds in the same period a year earlier.
A new government proposal may help trigger a bounce back. Financial Secretary Paul Chan Mo-po said the HKEX and the Securities and Futures Commission have been reviewing more listing reforms to help pre-profit or pre-revenue start-ups raise funds in the city.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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