Hong Kong’s bourse operator reported a better-than-feared full year profit decline for 2022 as geopolitical tension curbed trading and listing activity, but its chief executive was cautious about the year ahead despite signs of a recovery.
Profit attributable to Hong Kong Exchanges and Clearing Ltd (HKEX) last year fell 20% to HK$10.078 billion ($1.28 billion), beating an average forecast of HK$9.92 billion, according to Refinitiv.
The exchange operator said core revenue in the fourth quarter dropped by 9% to HK$18.37 billion from a year earlier, dragged down by weaker cash market turnover as a result of tighter market liquidity and sluggish trading.
China’s economic slowdown, sweeping regulatory moves that hampered large enterprises’ fundraising outside mainland China, and geopolitical tensions all resulted in a bleak year for new listings in Hong Kong, but there were signs of a rebound.
“Market sentiment began to improve in the fourth quarter, resulting in a strong end to the year for HKEX,” HKEX Chair Laura Cha said in a release.
In December alone there were 21 new listings, accounting for about a quarter of total listings on the bourse in the year, according to HKEX Chief Executive Officer Nicolas Aguzin.
While average daily turnover for the year dropped 26% to $108.5 billion from a record in 2021, average daily turnover in the fourth quarter rose 5% from a year earlier to HK$113.6 billion.
Nevertheless, Aguzin saw a tough road ahead.
“The broader challenges of 2022 will likely persist into 2023 – inflationary pressures, geopolitical tensions, economic malaise, and the lasting effects of the COVID-19 pandemic,” Aguzin said in the release.
“However, the longer-term opportunities are still there.”
China last Friday published a set of final rules to regulate offshore listings, effective from March, which is set to revive offshore initial public offerings (IPOs) by Chinese firms after a regulatory freeze imposed in July 2021.
Only around $12.7 billion was raised last year via IPOs and secondary listings in Asia’s most popular fundraising venue, a 70% drop from 2021, according to Refinitiv data.
Reuters