HONG Kong Exchanges & Clearing (HKEX) is benefiting from mainland Chinese investors in need of diversifying their holdings at a time of turbulence in markets from Shanghai to Shenzhen.
Flows in the trading link that connects Hong Kong with mainland markets jumped 47 per cent in the second quarter from a year earlier period, the bourse said in a statement on Wednesday (Aug 21). That helped profit rise by 9 per cent in the period.
“We’re seeing that kind of interest from investors coming down from the mainland to diversify their investments,” chief executive officer Bonnie Chan said in an interview with Bloomberg TV after the results. “We’re sitting in a very good position in terms of capturing that as the super connector.”
The surge in trading from the mainland comes as China may see its first yearly outflow from equities in 2024 as the economy has struggled to gain momentum. At the same time, Chinese investors are clamoring for assets amid a protracted slump in the nation’s real estate market and sinking stocks.
Hong Kong’s benchmark index is up 2 per cent this year, while mainland China’s key gauge is down 3.2 per cent.
HKEX’s report marks the first full quarter with Chan in charge of the city’s exchange. The former chief operating officer is also benefiting from a pick up in initial public offerings, partly encouraged by supportive measures from Chinese regulators.
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The bourse saw 18 listings in the quarter, up 50 per cent from the previous three months. It has a pipeline of about 107 firms waiting to list. Still, overall fundraising was down 25 per cent from the first half last year.
The exchange also had sizable additional offerings of shares, which shows the strength of the market, Chan said.
“Year to date, we have seen many companies listed on our exchange conducting follow-on offerings, which are mega deals,” Chan said, adding that the value of these offerings was as high as US$5 billion with investors from the US and Europe also participating.
The firm’s second quarter net income rose to HK$3.16 billion (S$530 million) from a year earlier. Core revenue rose 7 per cent, while investment income jumped 37 per cent.
Two of the biggest IPOs in the quarter included aircraft manufacturer Cirrus Aircraft and China-based ride-hailing services firm Chenqi Technology. BLOOMBERG
