Hong Kong Bourse Net Rises 54 Percent to a Record $1 Billion

  • Fourth-quarter profit and revenue flat year-over-year
  • HKEx doesn't have near-term catalysts for growth: analyst

Hong Kong Exchanges & Clearing Ltd., the most valuable exchange operator in Asia, said full-year earnings rose to a record on higher trading turnover.

Net income jumped 54 percent to HK$7.96 billion ($1 billion) last year, up from HK$5.17 billion a year earlier, the exchange said in a statement on Wednesday. Revenue increased 36 percent to HK$13.38 billion in the period. Analysts were expecting net income of HK$8 billion, according to data compiled by Bloomberg.

HKEx’s fourth-quarter net income and revenue were little changed from the year-ago period, at HK$1.5 billion and HK$2.8 billion, respectively, according to Bloomberg calculations using the full-year and nine-month reports.

HKEx’s shares rose 3.5 percent to close at HK$175 in Hong Kong trading.

Daily Trading

Equity daily trading fell to an average HK$71.9 billion in the fourth quarter from HK$101.5 billion three months earlier. The average daily number of options contracts traded also fell in the fourth quarter to 334,000. The average number of futures contracts dropped to 308,000 from 323,000 in the third quarter.

The bourse, which plans to introduce new index and currency futures, said it saw its average daily stock-trading turnover rise 52 percent to HK$105.6 billion in 2015. Daily trading has averaged about HK$72.5 billion this year, 13 percent lower than in the same period a year earlier, according to data compiled by Bloomberg. The company needs to expand its trading links with China to generate additional revenue, some industry analysts said.

“We don’t see any catalysts for the earnings drivers in the first half of 2016,” said Edmond Law, a Hong Kong-based analyst with UOB-Kay Hian Holdings Ltd.

The planned expansion of the equity-trading link between Hong Kong and Shanghai to Shenzhen may generate extra revenue for the exchange, he said.

Solid Portfolio

At a press conference on Wednesday, Chief Executive Officer Charles Li declined to comment on whether HKEx plans any acquisitions.

“We have a solid portfolio of organic growth and also external growth that we actually can be solely responsible without having to pay anybody," Li told an audience of reporters and analysts. “We are not actively looking for something just to add on to portfolios.”

Deal activity has increased in the industry recently, with London Stock Exchange Group Plc and Deutsche Boerse AG confirming they are in merger talks while Intercontinental Exchange Inc. has said it is considering a bid for the U.K. bourse. Singapore Exchange Ltd. said on Feb. 26 that it’s seeking to buy London’s Baltic Exchange Ltd.

“If there are opportunities that present themselves without us going around and soliciting them, and add value to what we do, we will look at them," said Li.

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