Hong Kong Exchanges and Clearing Ltd (HKEX), operator of the Hong Kong Stock Exchange, said its net profit for 2018 jumped 26 percent to a record high US$1,186 million (HK$9.31 billion) from US$943 million (HK$7.4 billion) year-on-year.
It said this surge met expectations and was boosted by fees from mega IPOs early in 2018. The bourse's actual profit is somewhat lower than the US$1,192 million (HK$9.36 billion) average of 16 analyst estimates compiled by Refinitiv. The 2018 net profit, however, easily best the previous record of $1,014 million (HK$7.96 billion) set in 2015.
HKEX said its revenue from listing fees rose 63 percent to US$104.7 million (HK822 million). Trading fees rose 64 percent to US$318.5 million (HK 2.5 billion) as trading turnover hit a record high.
Also in 2018, the average daily volume of metals contracts traded on HKEX-owned London Metals Exchange rose 5 percent to 630 thousand lots.
HKEX CEO Charles Li and Chairman Laura Cha said the outlook for 2019 is far more challenging than 2018, implying that hopes of exceeding the 2018 record appear remote.
"We are entering 2019 with more geopolitical and economic uncertainty than has been the case for many years," said Cha.
The record was also helped along by HKEX revising its listing regime in a bid to boost its competitiveness over other financial centers after a number of big Chinese corporations abandoned HKEX for Wall Street.
Also contributing to the rosy year was HKEX allowing IPOs by companies with dual-class share structures. HKEX also accepted IPOs from biotech startups without revenue and eased requirements for overseas-listed Chinese firms that wanted a secondary listing.
These moves meant that HKEX's second and third largest IPOs in 2018 - Xiaomi Corporation and Meituan Dianping -- listed two share classes. The result was that Xiaomi raised $5.4 billion from its IPO while Meituan took home $4.9 billion.
These changes helped HKEX become the leader among global financial centers for IPO volume in 2018, according to Refinitiv. HKEX also revealed a three-year strategy to continue broadening its focus away from equity trading.
"We intend to transform ourselves from being a leading global exchange not only by virtue of our size but also in terms of our product range, reach, global relevance, regulatory standards, market efficiency, and technological innovation," said Li.
