HONG KONG: Hong Kong’s stock exchange operator said quarterly profit dropped 8%, the steepest slide in nearly three years, as investor sentiment was hit by months of political unrest that pushed the Asian financial hub into recession.
Also citing the US-China trade war and uncertainty over Brexit, the Hong Kong Exchanges and Clearing Ltd (HKEX) said profit tumbled to HK$2.2bil (US$281mil) in the third quarter from the same period a year earlier.
Revenue fell 6% to HK$3.3bil.
Trading fees, which make up the largest chunk of the bourse’s revenue, skidded 10% to HK$1.4bil as the average daily turnover of securities plunged 19% from the preceding quarter and 16% from the same period a year earlier. Stock listing fees dropped 13.6% to HK$394mil.
Hong Kong’s Hang Seng index declined 8.6% during the quarter to end-September, marking its worst quarter in four years. Shares in the bourse fell even more, losing 16.5% during the quarter.
While Hong Kong’s pro-democracy protests show no signs of abating, the exchange’s earnings could be bolstered by a pick-up in IPOs in the fourth quarter.
E-commerce giant Alibaba Group Holding Ltd is looking at a listing in Hong Kong as early as November which may raise up to US$15bil, sources have said.
The Hong Kong exchange launched a surprise US$39bil approach for the London Stock Exchange (LSE) Group in September, but withdrew it after failing to convince LSE management and investors to back the move. Analysts expect the bourse will refocus its efforts on expanding links with mainland China.
“We were disappointed not to proceed with a firm offer for LSEG, but we remain resolutely focused on the successful execution of our three-year strategic plan, maintaining good cost discipline and capturing future growth opportunities, ” Charles Li, the bourse’s CEO, said in a statement yesterday.
A total of US$18.5bil was raised by companies via IPOs on the Hong Kong bourse from January through to mid-October, compared with US$21.9bil raised on the NYSE and US$23.3bil on Nasdaq, Refinitiv data showed. — Reuters
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