A woman walks past Exchange Square which houses the Hong Kong Stock Exchange in Hong Kong on April 27, 2022. (DALE DE LA REY / AFP)
Despite its profit slide of a hefty 20 percent year on year in 2022, Hong Kong Exchanges and Clearing Ltd saw “strong momentum” towards the end of 2022, recording its highest-ever quarterly profits of HK$3 billion ($382.4 million) in the fourth quarter — a 32 percent increase compared to the previous quarter.
According to a filing on Thursday, the city’s bourse operator reported “encouraging performances” in derivatives markets and ETPs. Stock Connect and Swap Connect also contributed to the growth, especially following the announcement last October by the government of the Hong Kong Special Administrative Region that it was planning to reopen the border.
CEO Nicolas Aguzin said in a statement that, “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.”
The exchange's revenue and other income declined 12 percent to HK$18.5 billion with the core business net profit dropping 14 percent from the record in 2021, caused by geopolitical tensions and interest rate hikes. The investment portfolio, on the other hand, gained 52 percent thanks to rising interest rates. Northbound Bond Connect’s average daily trading reached a record high of 32.2 billion RMB ($4.67 billion), up 21 percent compared with 2021.
Aguzin said during a news conference on Thursday that despite the challenging macroeconomic situation, the financial hub made good strategic progress last year, supported by the government's announcement of key initiatives.
Aguzin expects “many more macro challenges in 2023 to persist”, adding that global headwinds, including inflationary pressures and the risk of a global economic recession, could potentially affect market sentiment going forward.
HKEX saw a total of 90 IPOs in 2022, raising a total of HK$104.6 billion. Although this amount represents a 68 percent year-on-year decrease in fundraising, it marks a more than fourfold growth in the second half of the year compared to the first half.
The 90 new companies are reportedly from a range of sectors and geographic locations; the majority of the funds — around 65 percent — came from companies in the new economy and biotech sectors, putting Hong Kong in the top four markets globally in 2022.
Aguzin said he was optimistic about the HKEX’s focus and resilience with its efforts in setting up infrastructure. The exchange is now anticipating an “all-weather” operation, with Financial Secretary Paul Chan Mo-po announcing on Wednesday that the government was planning to keep the city’s US$5 trillion stock market open come rain or shine to advance its competitiveness.