By Sherry Qin

Hong Kong Exchanges & Clearing's quarterly net profit fell for the first time in over a year as the exchange operator fell victim to China's lackluster economic recovery and continued tepid demand for fundraising in one of Asia's biggest financial hubs.

HKEX's net profit fell 13% year on year in the fourth quarter, dropping to 2.60 billion Hong Kong dollars (US$332.1 million), the exchange operator said Thursday. That marked the first decline since the third quarter of 2022, and missed an estimate for HK$2.71 billion compiled in a FactSet poll of analysts.

Revenue fell 7% from the year-earlier period to HK$4.86 billion, just below a FactSet estimate of HK$4.90 billion. HKEX said lower trading and clearing fees from its cash and derivatives market offset higher trading and clearing fees from the London Metal Exchange, a subsidiary, as well as higher net investment income from margin funds and clearing house funds.

HKEX saw sharply lower trading volume during the quarter, with headline average daily turnover sliding 28% on the year to HK$91.0 billion.

Hong Kong markets were battered in the fourth quarter amid China's slower-than-expected economic recovery. After some of China's largest and most influential Hong Kong-listed companies registered big losses in the fourth quarter, the Asian financial hub in January was overtaken by India as the world's fourth-biggest equity market.

HKEX had 73 new listings in 2023 that raised the equivalent of nearly $6 billion. That was down roughly 56% from total equity funds raised in initial public offerings in 2022 and 86% lower than 2021 levels.

"The global IPO market continued to be impacted by weak market sentiment and the broader challenging macroeconomic backdrop," the company said.

Despite disappointing fourth-quarter results, HKEX posted a 18% net profit gain for 2023, while its full-year revenue grew 3%.

"The macroeconomic and geopolitical environment remains turbulent," said Nicolas Aguzin, HKEX's outgoing chief executive. However, he added, "we are cautiously optimistic that, as sentiment improves, we are well placed to capitalise on the global pivot to Asia."

HKEX cited some signs of improving sentiment emerging on expectations of slower inflation in major economies and the possible end of the monetary tightening cycle by central banks.

The bourse operator is in a period of leadership change, with Aguzin, a former executive at JPMorgan Chase who joined HKEX in 2021 when it was the world's most valuable exchange group, stepping down this week several months ahead of the scheduled end of his three-year term.

Bonnie Chan, HKEX's co-chief operating officer, assumes the top leadership role from Friday.

Write to Sherry Qin at

(END) Dow Jones Newswires

02-29-24 0140ET