Hong Kong Exchanges and Clearing Ltd. (HKEX) reported a 10% rise in annual profit, reaching a record HK$13.05 billion ($1.7 billion) for 2024, driven by a surge in trading turnover and a rebound in initial public offerings (IPOs). The results mark a strong recovery for the exchange, which had previously been weighed down by sluggish economic growth in China and regulatory constraints.
HKEX's performance benefited from a rally in Hong Kong and mainland stock markets, fueled by Beijing's stimulus measures and easing interest rates in the latter half of 2024. The Hang Seng Index climbed 17% this year, following an 18% gain in 2024, bolstered by increased investor confidence and rising valuations of technology firms.
"Our outlook for 2025 is cautiously optimistic," HKEX CEO Bonnie Chan said during a media conference. "We expect the macro uncertainties that have characterized the last few years to continue. At the same time, we are encouraged by the renewed interest in trading and IPOs in Hong Kong so far this year."
The bourse's average daily turnover of equity products rose 29% to HK$120 billion, with a record monthly trading volume of HK$620.7 billion in October. The Stock Connect scheme, which facilitates cross-border trading with mainland China, saw its southbound trading volume-investments from mainland China into Hong Kong-jump 55% to HK$48.2 billion.
IPOs were a key driver of HKEX's strong performance. In 2024, 71 companies raised HK$88 billion through new listings, an 89% increase from the prior year. The momentum appears to be continuing into 2025 as mainland Chinese firms accelerate plans to raise capital offshore. According to Dealogic, offshore equity deals involving Chinese companies have totaled $3.3 billion so far this year, more than six times the amount raised during the same period in 2024.
HKEX has been working to streamline its listing framework to attract more companies. The exchange implemented changes last year, including a shorter application process and a new treasury share regime. It is also considering reforms to the IPO price discovery process to enhance efficiency.
Chan emphasized the need for Hong Kong to keep pace with global financial infrastructure developments. The exchange is preparing to transition from a T+2 to a T+1 trading settlement cycle, aligning with moves by the U.S. and Europe. "The U.S. has moved onto a T+1 settlement cycle, and Europe has plans to do so in 2027," she said. "We are the market operator we need to keep that conversation going."
Beyond equities, HKEX saw growth across other asset classes. Futures contracts traded on the exchange rose 12% year over year to 830,000 per day, while stock options trading climbed 18% to an average of 720,000 contracts daily. The Bond Connect scheme, which enables offshore investors to trade yuan-denominated bonds, handled a record 41.6 billion yuan ($5.73 billion) in transactions, marking a 4% increase from the previous year.
Investment gains also contributed to the exchange's record earnings. HKEX booked a HK$1.7 billion net investment gain from its global stock and bond portfolio, an 18% increase from 2023. The exchange's revenue from trading fees grew by 24%, supported by higher transaction volumes.
Chan highlighted HKEX's efforts to attract international listings, stating that she recently met with potential issuers in Malaysia, Saudi Arabia, and London. The exchange is also working on a new "technology enterprises channel" aimed at helping specialist tech and biotech firms-particularly those listed in mainland China-raise capital in Hong Kong.
Despite ongoing geopolitical uncertainties and macroeconomic challenges, HKEX remains optimistic about sustaining its growth. "As we look to 2025, a year in which HKEX will celebrate its 25th anniversary as a listed company, I am very optimistic that we will continue to strengthen Hong Kong's role as a leading international financial center," Chan said.
