HKEx May Take Stakes In International Stock Markets

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

26 August 2002

After Hong Kong Exchanges and Clearing (HKEx) reported a 21% drop in net profit to HK$290 million for the six months to June 30, on income down 11% to HK$893 million, the exchange is reportedly considering investments in other equities markets, using its reserves of $5.27 billion, to boost its returns and expand its international reach.

According to the South China Morning Post, an HKEx board meeting last week agreed to appoint investment bankers to conduct a study on whether to proceed with such a plan, and to identify potential targets for acquisition or investment.

A source told the newspaper: "Acquisitions of overseas exchanges or trading platforms would not only bring a better profit for the exchange, but it would also help the exchange to build up co-operative relationships with international counterparts. This will help the exchange to build up more international alliances and will enhance its competitiveness in the international stock and futures markets."

However, the fall in HKEx's results was mostly due to lower trading levels, which evidently reduce fee income, something which will reverse itself in time, and the exchange may limit its international involvement to minority stakes. It already owns one per cent of the Singapore Exchange, and in April, it acquired 15.6% of electronic bond-trading platform of BondsInAsia Limited.

Recommended