Volkswacht Bodensee - Hong Kong exchange posts 31% rise in H1 profit despite IPO malaise

It was a "good half year for HKEX, despite continued global macro uncertainty and market fragility", bourse chief executive Nicolas Aguzin said in the earnings report.

First-half revenue rose 18 percent to $1.4 billion compared to the year before.

The bourse attributed the strong revenue result -- its "second best ever" -- to a $345 million net investment income buoyed by high interest rates, and strong performance of its external portfolio.

"In the first half of 2023, Hong Kong Cash Market trading volume and IPO activity continued to be impacted by global market fragility," HKEX said in its announcement.

"The global IPO market was weak, though Hong Kong performed relatively well", it said.

But new listings in the first six months raised just $2.3 billion, down nine percent from the year before.

The figures were also a sharp contrast to peak levels in 2020 when IPOs raised $51 billion.

Hong Kong's bourse has only recently emerged from the shadow of the city's strict zero-Covid policy, which spooked international investors and tanked the wider economy.

New listings from China's mega-companies also dried up in recent years following Beijing's regulatory crackdown on the property and technology sectors.

The bourse last month published rule changes that would allow mainland Chinese firms seeking a listing to refrain from disclosing China-related risks.

Under previous rules, those prospective IPOs had to list risk factors linked to Chinese "laws and regulations, political and economic environments, foreign exchange risks and controls" and other related risks.

The bourse has denied this would lessen the scrutiny of Chinese-incorporated firms.

In its Wednesday results announcement, HKEX said the IPO market showed "signs of good momentum" in the second quarter and that it had 104 active applications for new listings as of June.

"We are pleased to see encouraging signs of a revival in our IPO market, matched by a very healthy pipeline," Aguzin said.

Average daily turnover of equity products in the first half fell by 14 percent year-on-year.

The bourse's stock price has declined by around 13 percent since the start of the year.

E.Schubert--BTB