Hong Kong’s stock exchange operator, HKEX, has published its consolidated financial results for the year ended December 31, 2018, with the Group achieving a record profit during 2018, boosted by strong trading, clearing fees and fees from a number of initial public offerings (IPOs).
Specifically, revenue and other income reached the highest ever value for HKEX, increasing by 20 percent from HK$13.2 billion ($1.7 billion) in 2017 to HK$15.9 billion in 2018. This was driven by record highs in cash market turnover and derivatives market trading volume, in addition to an uptick in clearing and IPO fees.
Profit attributable to shareholders also saw a solid year-on-year increase of 26 percent, climbing from HK$7.4 billion in 2017 to HK$9.3 billion in the 12 months ended December 31, 2018.
Commenting on the results, Charles Li, Chief Executive of HKEX said, “This was an excellent year for the Company. Record volumes in our Cash Market, record volumes in our Derivatives Market and a world-leading IPO market that welcomed 218 companies, including 7 under our new listing chapters, resulted in a 26 per cent uplift in profit for the year.”
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Furthermore, in the financial statement under the CEO review, it said: “With our continued focus on Fixed Income, Commodities and Currency (FICC) as well as innovative technologies, we successfully concluded our Strategic Plan 2016-2018 with a set of major achievements, putting us in an excellent position to embark on the next phase of our journey.”
HKEX Expands Cross Currency Swaps Product Offering, Clearing Volumes Jump
Taking a look at clearing volumes, which contributed to the uptick in profits and revenues as a result of fees, OTC Clear reached $120.4 billion. When measured against 2017, this represents a significant jump of 210 percent.
This increase was partly driven by HKEX expanding its product scope in 2018 by introducing clearing of USD-HKD Cross Currency Swaps and Deliverable Foreign Exchange (DFX) denominated in USD/CNH and USD/HKD.
The introduction of the new products resulted in the clearing volume of both Cross Currency Swaps (CCS), and Interest Rate Swaps from Mainland banks to jump substantially year-on-year. This was also thanks to seven new clearing members joining HKEX in 2017 and a further two in 2018, the statement said.
“The market outlook for 2019 looks set to be more challenging, but we are confident that HKEX is very well placed to continue to be the financial gateway to and from China, that our business is strongly positioned to capitalise on growth opportunities and that we will continue to be globally attractive and competitive,” the CEO added.