HKEx Half Year Profits Fall

by Mary Swire, Tax-News.com, Hong Kong

14 August 2009

Hong Kong Exchanges and Clearing (HKEx) saw year-on-year income fall 20% to HKD3.353bn (USD432m) in the first half of the year. Meanwhile, profit attributable to shareholders dipped 26% to HKD2.2bn, the HKEx announced on August 12.

The HKEx Board declared an interim dividend of HKD1.84 a share, down 26%. The average daily turnover was HKD58.3bn, down 33%.

The average daily number of derivatives contracts traded on the Futures Exchange, however, rose 12% to 213,630, while that for stock options contracts traded on the Stock Exchange fell 14% to 206,084.

According to HKEx, the profit drop was primarily attributable to lower turnover-related income resulting from the decrease in activity in the cash market and the drop in net investment income on account of lower net interest income this year.

The one-off gain of HKD69m from the disposal of two properties last year was not repeated in 2009. Total operating expenses fell by 1% mainly due to lower staff costs but were partly offset by an increase in premises expenses.

Announcing the half-year interim results, HKEx Chief Executive Paul Chow said the body became the largest listing exchange in the world in July with the market capitalization of its own shares reaching USD20bn. It was ranked third a year ago.

"We have done quite well in the first half of this year, particularly in the second quarter. Obviously this is due to improved investment sentiment and also a marked increase in the activities in both the cash and derivatives markets," Chow said.

HKEx Chairman Ronald Arculli said the group would seek to consolidate Hong Kong's position as an international financial center in spite of market uncertainties.

"We aim to streamline the listing process without compromising investor protection, and to expand our product and service offerings to position ourselves well for a market recovery. Certified emission reduction futures and options with flexible features are examples of innovative products being considered by HKEx," he explained.

Noting the group is preparing its strategic plan for 2010-12, Arculli reaffirmed its commitment on market quality and its mission to be a leading international marketplace for securities and derivatives focused on mainland China, Hong Kong and the rest of Asia. But HKEx also intends to look further afield to take advantage of any opportunities that may arise, he added.

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