HKEX Sets New Record of Quarterly Profit

Analysts say the outlook remains positive despite Ant Group's record-breaking listing being halted.
Anthony RussoNov 11,2020,15:48

The Hong Kong Exchanges and Clearing (HKEX) Wednesday posted a record quarterly profit for the three months ending September.

The city’s bourse operator said net profit leaped 52% to HK$3.45 billion, ($444.96 million). The results not only beat analysts’ projections, who were estimating for net profit to come in at HK$3.23 billion but it also marked the second straight three-month period in which the exchange shattered a quarterly record.

For the first nine months of the year, the HKEX generated HK$8.58 billion ($1.1 billion). The top line grew to HK$12.6 billion, up 21% year-over-year.

Covid-19? No Problem Says Chinese U.S.-Listed Firms

While the outbreak of Covid-19 presented some challenges, it wasn’t able to stop big share sales this year including Chinese firms that already had U.S. listings.

Some mega secondary listings from January to September included the fast-food operator Yum China, (NYSE: YUMC; HKEX: 09987) as well as the two internet giants NetEase, Inc. (Nasdaq: NTES; HKEX: 09999) and, Inc. (Nasdaq: JD; HKEX: 09618). Altogether, these Chinese giants raised nearly $9 billion in their Hong Kong shares sales this year.

There were also some big primary listings conducted this year including the share sale of China Bohai Bank, (HKEX: 09668) which raised $1.78 billion.

“HKEX performed well in the first nine months of 2020, despite a volatile macro backdrop,” Charles Li Xiaojia, the chief executive officer of the HKEX said of the results, who is set to set to step down at the end of the month, as cited by the South China Morning Post.

“We remain on track with the delivery of our Strategic Plan 2019-2021, well-placed to capture future growth opportunities and fully focused on managing costs and risks. With robust trading volumes, a strong IPO pipeline, and an expanding product portfolio, I am confident that HKEX will play an increasingly important role in global markets.”

Outlook Remains Strong Despite Ant’s Mega Listing on Halt

Meanwhile, there is one problem: Ant Group’s record-breaking dual listing on the Stock Exchange of Hong Kong and Shanghai’s Nasdaq like Star Market has been suspended due to regulatory concerns. However, analysts say the outlook of the HKEX “remains positive.”

“The postponement of Ant’s listing might have a short-term negative impact on HKEX’s share price,” Kenny Ng Lai-yin, a securities strategist at Everbright Sun Hung Kai, said as cited by the SCMP.

Further, “However, the trend for the many US-listed mainland technology giants to return home to list in Hong Kong will continue.”

Previously, the Bloomberg consensus estimate was calling for the HKEX to see a record full-year net profit of HK$10.95 billion, up 17% from last year.

One potential big Hong Kong listing to keep an eye on is the Chinese rival of TikTok Kuaishou Technology. The listing, which could fetch $5 billion, could happen as early as this year, according to Bloomberg., Yum China, TikTok, NetEase, Kuaishou Technology, China Bohai Bank, Ant Group.