Hong Kong Exchanges First-Half Profit Climbs on IPOs

Hong Kong Exchanges & Clearing Ltd. (388), the world’s biggest bourse operator by market value, said profit improved in the first half as initial public offerings surged.

Net income rose 1.7 percent to HK$2.37 billion ($305 million) in the six months through June 30 from HK$2.33 billion a year earlier, according to a statement today. Revenue increased 4.1 percent to HK$4.62 billion from HK$4.44 billion last year, while funds raised by companies through IPOs doubled to HK$82.1 billion, the bourse said.

The benchmark Hang Seng Index (HSI) rose 5.8 percent this year through yesterday, and a measure of Chinese stocks traded in the Hong Kong last week entered a bull market as funds flowed in to the city on bets China’s economy is stabilizing. An exchange link with Shanghai, announced in April by regulators, added to optimism trading volume will increase, prompting analysts from Goldman Sachs Group Inc. to Deutsche Bank AG to boost the Hong Kong bourse’s target price.

“With the help of the stock connect expected to be launched in October, a boost to market turnover on HKEx is expected,” said Louis Wong, a Hong Kong-based fund manager at Phillip Capital Management. “The predictability of IPOs is a bit difficult as it’s very fluid and easily affected by market sentiment.”

Stock Rises

Hong Kong Exchanges climbed 0.3 percent to HK$174.90 today as of 1:17 p.m. in the city. The shares surged 33 percent through yesterday from April 10, when the Hong Kong-Shanghai link was announced. Under the plan, scheduled to start in October, foreigners will have unprecedented access to Shanghai-traded shares, while wealthy mainland individuals will have a route to buy Hong Kong stocks.

The daily average turnover slid 7.9 percent to HK$62.9 billion in the six months through June from HK$68.3 billion the same period last year, according to today’s statement.

Trading volume at the London Metal Exchange, acquired by the Hong Kong bourse in December 2012, rose 10 percent from the second-half of 2013 on higher demand for commodities, the statement said.

“In the first half of 2014, there were signs of renewed optimism in the capital markets,” Hong Kong Exchanges said in its statement. “We will continue to provide support to companies wishing to list in Hong Kong to raise funds for further growth and development.”

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey

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