Hong Kong exchange’s 2023 profit misses forecast as new listings, trading income sags

By Thomson Reuters Feb 28, 2024 | 11:00 PM

HONG KONG (Reuters) – Hong Kong’s bourse operator on Thursday reported an 18% profit rise in 2023, but missed estimates as higher investment income was offset by a drop in trading and listing activities amid worsening macro conditions in the Asian financial hub.

China’s economic slowdown, a sweeping regulatory tightening that hampered large companies’ fundraising outside mainland China, and geopolitical tensions have all resulted in a bleak year for new listings in Hong Kong.

Noting challenges including high interest rates, a complex geopolitical environment as well as ballooning recent budget deficits, Hong Kong on Wednesday announced a mix of measures to lure back capital, businesses, and visitors to the city.

The profit attributable to shareholders of Hong Kong Exchanges and Clearing Ltd (HKEX) rose to HK$11.86 billion ($1.52 billion) last year from HK$10.08 billion in 2022, according to its earnings statement.

The profit, however, is smaller than a HK$12.05 billion average forecast from analysts compiled by LSEG.

Net investment income from the exchange’s corporate funds during the year posted a gain of HK$1.5 billion, compared to a loss of HK$48 million in the year-ago period, according to the statement.

Against the backdrop of global economic and geopolitical challenges, however, the Hong Kong IPO market saw a decrease in activity in 2023, with 73 company listings raising HK$46.3 billion, a drop of 56% compared with 2022, it added.

The average daily turnover of equity products traded on the Hong Kong stock exchange also posted a drop of 14% to HK$93.2 billion during 2023 compared to the preceding year, according to the statement. ($1 = 7.8272 Hong Kong dollars)

(Reporting by Selena Li; Editing by Sumeet Chatterjee and Lincoln Feast.)