HKEX posted net loss of $274m in Q2 22

The stock exchange experienced lower depository fees from e-IPOs.

When geopolitical tensions including Russian invasion in Ukraine and rising costs hit markets in the first half of 2022, the Hong Kong Exchanges and Clearing Limited (HKEX) was not exempted from the impact of these factors.

In the second quarter (Q2) of 2022, the Hong Kong stock exchange registered a net loss of $274m, compared to net income of $209m. 

In its financial highlights, the HKEX said its core business revenue for the quarter was 4% down from Q2 2021 because of lower headline average daily turnover and lower depository fees gained from e-IPO applications.

This was partially mitigated by the increase of Average Daily Value Traded of derivatives markets and increase in net investment income from margin funds and clearing house funds.

Total revenue and other income of the stock exchange was 14% down from Q2 2021, triggered by the external portfolio’s net fair value losses of $322m in Q2 2022.

Its operating expenses went up 14%, which stemmed from higher staff costs reflecting investments in talent and higher recruitment costs.

With this, its profit attributable to shareholders of $2.16b, which was 22% lower than Q2 2021.

But the HKEX will  mitigate the impact of market volatility by redeeming $2b from its external portfolio in the second of 2022. 

HKEX Chairman Laura Cha said the IPO pipeline is still strong even as there was a slowdown of IPO activity in the first half of this year.

“Stock Connect trading remained resilient during the first half of the year, while Northbound Bond Connect trading continued its strong track record of growth, with average daily turnover reaching RMB31.2 billion, up 17% year-on-year,” she said.