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The Hong Kong stock exchange trader has made its best quarterly profits in history, as a flood of negotiations and early public offerings propelled the stock market before a new chief executive took the helm.
Hong Kong Exchanges and Clearing said Wednesday that after-tax profits rose 70% year-on-year in the first quarter to A $ 3.8 billion (US $ 490 million) as basic business revenue driven by turnover and listing commissions rose more than a third to a record A $ 5.5 billion. Investment income increased to A $ 418 million from a loss in the first quarter of 2020.
“HKEX has started strong in 2021,” he said Calvin Tai, interim CEO, who noted a “strong IPO market and very robust trading volumes … in a challenging economic and geopolitical context.”
Hong Kong’s position as an Asian financial center has been questioned after Beijing last year imposed a draconian national security law on the city.
But the efforts made by rival exchanges in Shanghai and Shenzhen to internationalize, have long worried HKEX only limited progress. Growing hostility to China in Washington has strengthened Hong Kong’s role as a fundraising center for Chinese companies.
The stock market’s first-quarter performance also benefited from a series of high-profile IPOs from Chinese technology companies, including that of the short video platform Kuaishou, which raised more than $ 5 billion in February.
Chinese groups listed in New York have added to the flow of sales of major ticket shares in Hong Kong this year. Technical groups Baidu and Bilibili were one of the companies that launched secondary listings in the city when US regulators prepared forcibly withdraw groups that do not meet national accounting requirements.
“Hong Kong is still an offshore market for mainland China. Close to the coast, but still off the coast, “said an HKEX expert.” Shanghai Stock Exchange’s internationalization plans are unlikely to undermine Hong Kong because the domestic market still suffers from a lack of capital convertibility by to companies that want to raise currencies other than the offshore renminbi “.
Gains on HKEX also increased thanks to the negotiation of mainland Chinese investors in Shanghai and Shenzhen, which did shut down shares in the Hong Kong market through so-called stock connection programs.
HKEX recorded an average daily turnover of almost A $ 61 billion through continental investors during the first three months of 2021, which helped bring the total daily stock turnover to a record A $ 224 billion.
Trade by international investors in Chinese stocks and bonds through connection programs also peaked, with daily turnover rising to Rmb127bn (US $ 20 billion) and Rmb25bn, respectively.
Tai, the interim chief executive, had been in charge of directing the exchange after the departure of predecessor Charles Li, which played the role for a decade and launched stock and bond connection programs.
Nicolas Aguzin, a former senior banker at JPMorgan, is ready to take the reins at HKEX in May.
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