After six straight quarters of sliding profits, the end of 2022 brought some relief to Hong Kong Exchanges & Clearing Ltd.
(Bloomberg) — After six straight quarters of sliding profits, the end of 2022 brought some relief to Hong Kong Exchanges & Clearing Ltd.
The operator of Hong Kong’s stock exchange reported an 11% increase in profit to HK$2.98 billion ($380 million) in the fourth quarter, according to a statement on Thursday. That beat a HK$2.92 billion estimate in a Bloomberg survey of analysts. For all of 2022, net income slid 20%.
Activity picked up at the end of last year after a prolonged drought of listings and slumping trading as China abruptly ended its Covid Zero policies. That, coupled with rising interest rates, helped the firm’s investment portfolio gain 52%.
IPOs and trading picked up pace and are poised to accelerate further this year as sentiment improves and China’s securities regulator signaled rules on local companies seeking initial public offerings overseas may be less strict than feared.
“The year finished very strongly for HKEX, with the group reporting record fourth quarter financials, offsetting in part the softer volumes and numbers in the first half,” Chief Executive Officer Nicolas Aguzin said in the statement.
Average daily turnover of equity products at the bourse rose 5% in the quarter, with southbound trading from mainland investors jumping 41%. Trading of mainland Chinese bonds through its connect link also jumped 17%.
The exchange saw 34 IPOs raising a total HK$31.4 billion in the fourth quarter, down 31% from the same period of 2021. In all of 2022, 90 companies debuted on the exchange raising HK$104.6 billion. The majority of activity came in the second half, with 21 listings in December alone. The fund’s raised in 2022 declined 68% from 2021.
So far this year, average daily turnover on the stock market is up 4% and IPOs year-to-date have outnumbered the same period in 2022, though the deal sizes are 60% smaller. The exchange also plans to lower listing threshold for advanced technology companies in a bet to lure more deals.
HK Proposes Lower Revenue Threshold for Cutting-Edge Tech IPOs
Sharnie Wong, a senior analyst at Bloomberg Intelligence, predicts IPOs in Hong Kong could triple this year, topping $40 billion.
The exchange is even trying to lure oil giant Saudi Aramco to list in the financial hub.
For its wholly-owned London Metal Exchange, professional fees increased by HK$122 million, or 78% yearly, due primarily to legal, claims and independent reviews relating to the nickel market incident, HKEX said. Chargeable average daily volume of metals contracts traded on the LME dropped 7% from a year earlier under challenging market conditions, it said.
(Updates on IPO, Bond Connect and LME figures)
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