By Sumeet Chatterjee and Scott Murdoch
HONG KONG (Reuters) – Hong Kong’s bourse operator reported a 10% rise in annual profit, helped by sharp increases in trading turnover and new company listings, and said it was optimistic that a pickup in Chinese economic activity would help its prospects.
Recent years have seen the exchange’s performance hampered by slow growth in China’s economy, regulatory tightening that kept a lid on companies’ fundraising outside mainland China as well as geopolitical tensions.
But stock markets in mainland China and Hong Kong have rallied in recent months after Beijing announced a slew of stimulus measures in the second half of last year to revive the economy.
Profit attributable to shareholders of Hong Kong Exchanges and Clearing Ltd (HKEX) rose to HK$13.05 billion ($1.7 billion) in 2024, in line with an LSEG consensus estimate.
HKEX shares closed 1.05% higher on Thursday after earlier trading in negative territory, outperforming the Hang Seng Index that closed down 0.3%.
HKEX Chief Executive Bonnie Chan, who took the helm last year, said geopolitical and macroeconomic developments will likely continue to impact markets this year.
“Our outlook for 2025 is cautiously optimistic. We expect the macro uncertainties that have characterised the last few years to continue,” Chan told a media conference. “At the same time we are encouraged in the renewed interest in trading and IPOs in Hong Kong so far this year.”
Stimulus policies in mainland China and interest rate cuts were helping the city’s fundraising and secondary markets, she said.
Chan said the exchange would shortly publish a white paper on Hong Kong implementing a T+1 trading settlement scheme to replace its current T+2 system. HKEX would have its technology systems ready for T+1 by the end of the year, but warned there would need to be major industry consultation before any changes were implemented.
“The U.S has moved onto a T+1 settlement cycle and Europe has plans to do so in 2027, I don’t think Hong Kong as an international market can ignore the fact there is such a trend. We are the market operator we need to keep that conversation going,” she said.
The bourse’s average daily turnover of equity products, a key source of revenue, rose 29% to HK$120 billion. The amount traded via the “southbound connect” – investments coming from the mainland to Hong Kong – surged 55% to HK$48.2 billion.
Its cash equities market hit a monthly record of HK$620.7 billion in turnover in October, the exchange said.
Hong Kong, the main destination for mainland Chinese firms looking to raise capital offshore, saw 71 new listings raise a combined HK$88 billion last year, a 90% increase over 2023.
That trend looks set to continue, helped by a 17% jump in the main Hong Kong index so far this year.
Bankers have said mainland firms are accelerating plans to raise fresh funds offshore, tapping into a rebound in investor sentiment fuelled by Beijing’s increased support for private firms and the popularity of DeepSeek’s AI models.
Offshore equity capital markets deals involving Chinese companies this year totalled $3.3 billion as of last week, more than six times the amount in the same period last year, Dealogic data shows.
Chan said the bourse had worked on its listing framework throughout last year to attract companies.
Changes include a shorter application process, a new treasury share regime for issuers and a consultation paper on proposals to reform the IPO price discovery process.
Chan said the HKEX was working to encourage more international companies outside of China to list in Hong Kong. Last week she had travelled to Malaysia, Saudi Arabia and London and met with potential issuers, she said.
($1 = 7.7758 Hong Kong dollars)
(Reporting by Sumeet Chatterjee in Hong Kong and Scott Murdoch in Sydney; Editing by Mrigank Dhaniwala, Edwina Gibbs and Tomasz Janowski)
