By Kimberley Kao


Hong Kong's stock-exchange operator reported higher profit for the second straight quarter as improved market sentiment boosted trading and listing activity in the Asian financial hub.

Third-quarter net profit climbed 6.5% from a year earlier to 3.145 billion Hong Kong dollars, equivalent to US$404.7 million, Hong Kong Exchanges & Clearing said Wednesday. That beat the HK$3.06 billion consensus estimate of analysts polled by Visible Alpha.

Revenue rose 3.3% to HK$4.85 billion but was below analysts' estimate of HK$5.36 billion. The company attributed the modest revenue growth to higher trading and clearing fees from increased volumes across the cash, derivatives and commodities markets.

HKEX posted stronger trading volumes during the quarter, with the headline average daily turnover jumping 21% to HK$118.8 billion. The average daily turnover for northbound Stock Connect trading hit a nine-month high, as did the average daily volume for derivatives contracts traded, it said.

Shares in the company ended 1.2% higher at HK$314.80 after rising as much as 3.7% following the results.

The exchange operator said 15 new listings in the quarter raised a combined HK$42.2 billion, more than triple the amount raised in the first half of the year.

It highlighted Midea Group's listing in September, Hong Kong's largest since February 2021 and the world's second biggest this year, and said its initial public offering pipeline remains healthy, with 96 active applications as of end-September.

The Hong Kong exchange operator's better-than-expected profit failed to convince some analysts that the turnaround will continue, however.

Citi expects HKEX's earnings growth to gradually stagnate, describing the outlook as flattish. It maintained its sell rating on the stock, with a target price of HK$275.00.

Market volatility, which has supported earnings, is expected to ease over the next few months, analyst Michael Zhang wrote in a research note. That would mean a moderation in trading activity, though October's record levels will buoy fourth-quarter results, Zhang said. He noted that moderating derivatives trading fees and lower investment income in the third quarter weighed on the exchange operator's core revenue, which missed Citi's estimates.

Increased investor interest has spurred a revival in China's stock market in recent weeks, after Beijing's multibillion-dollar monetary and fiscal push to rejuvenate an economy battered by weak consumer demand and a real-estate slump.

Hong Kong has also made efforts to get more companies to list in the city.

In his annual policy address last week, Hong Kong Chief Executive John Lee said authorities plan to optimize listing procedures to attract investments. The city's securities regulator and HKEX are also set to boost market efficiency and lower transaction costs to bolster Hong Kong's securities market.


Write to Kimberley Kao at kimberley.kao@wsj.com


(END) Dow Jones Newswires

10-23-24 0615ET