HKEx Profits Surge As Result Of Increased Turnover

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

18 August 2006

Hong Kong Exchanges and Clearing (HKEx) announced this week that it saw a 94% year-on-year surge in the profit attributable to shareholders in the first half of this year, to $1.1 billion. The interim dividend declared per share was 94 cents, up 92% over a year earlier.

Investment income also surged 78%, to $217 million.

HKEx Chairman, Ronald Arculli explained that the rise in profit was primarily attributable to growth in turnover-related income from the significant increase in activities on cash and derivatives markets, and more investment income arising from a rise in fair value gains of corporate fund investments and higher interest income.

Mr Arculli went on to add that HKEx's performance in the second half of this year might be affected by a number of external factors. Geopolitical risks, escalating energy prices, the rising cost of capital due to increasing interest rates and the intensifying global competition might all have an impact on the cash and derivatives markets in Hong Kong, he warned.

According to the interim results announced on Wednesday, HKEx recorded income of $1.9 billion, up 53% on a year earlier, while operating expenses rose 5% to $6 billion.

The average daily turnover value on the Stock Exchange was $32.6 billion, the figures revealed, 93% higher than the same period last year. The average daily number of derivatives contracts traded on the Futures Exchange and stock options contracts traded on the Stock Exchange also rose 56% and 152% to 97,471 and 63,411.

In the first half of this year, 22 companies were newly listed on the Main Board and four on the Growth Enterprise Market. Total capital raised, including post-listing funds, reached $195.6 billion. Total market capitalisation exceeded $10 trillion on May 3.

As at June 30, 948 companies were listed on the Main Board and 200 on the Growth Enterprise Market, with a total market capitalisation of about $9.84 trillion. In addition, there were 1,481 derivative warrants, eight Exchange Traded Funds, four Real Estate Investment Trusts and 174 debt securities listed.

The average daily turnover in this year's first half was about $32.4 billion on the Main Board and about $199 million on the Growth Enterprise Market.

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