Hong Kong bourse posts $1.5 B profit despite IPO drought

HONG KONG, China (AFP) – Hong Kong's stock exchange operator said Thursday that revenue and profits in 2023 were the "second best on record" despite new listings plunging to the lowest level in more than a decade.

Profits last year rose 18 percent to HK$11.9 billion ($1.5 billion), with strong results "fueled by notable growth in its derivatives, fixed-income and currencies business", Hong Kong Exchanges and Clearing's chief executive Nicolas Aguzin said in a results announcement.

But the bourse saw only 73 initial public offerings last year, which raised HK$46.3 billion, continuing a downward trend that began in 2020.

Before the pandemic, the Chinese finance hub was often crowned as the top IPO venue in the world, drawing more than 100 new listings annually between 2013 and 2020.

"The global IPO market continued to be impacted by weak market sentiment and the broader challenging macroeconomic backdrop" but there was still "continued momentum" for new listings in Hong Kong, HKEX said.

Hong Kong's stock exchange saw a decline in IPOS after Beijing's regulatory crackdown, which began in 2020, led some Chinese mega-companies to put their listing plans on hold.

China's last-minute cancellation of a 2020 IPO from Ant Group, which would have been the world's largest on record, kickstarted a years-long clampdown that spread to multiple sectors and wiped out trillions in market value.

In its Thursday announcement, HKEX said it was "cautiously optimistic" that it was "well placed to capitalise on the global pivot to Asia".

Core business revenue increased by three percent to HK$18.9 billion last year, which HKEX attributed to record net investment income from margin funds and clearing house funds, as well as an increase in LME trading and clearing fees.

Hong Kong authorities are trying to shore up the stock market, with city leader John Lee last year trimming the stamp duty on stock transfers and proposing reforms to aid small and medium enterprises seeking to raise funds.

The bourse is also planning to keep markets open during typhoons, a change that could come into effect by this summer, bringing it in line with the practice of other major exchanges worldwide.