Hong Kong Exchanges and Clearing has reported that profit for 2016 tumbled by almost 30 percent from the previous year.
The operator of Hong Kong's equity bourse, Hong Kong Exchanges & Clearing, has reported a 2016 net profit that missed analysts’ forecasts, weighed down by lacklustre transactions in the stock market and a drop in the number of companies seeking to raise capital.
The profit attributable to shareholders fell by 27 percent to 5,77 HK$ million, from 7,96 HK$ million in 2015. Revenue and other income fell to HK$ 11.1 billion, down by 17 percent, or HK$ 2,25 billion, from HK 13.37 billion in 2015.
Year of Uncertainty and Surprises
HKEx said 2016 was a year of uncertainty and surprises. The global financial markets were volatile and overshadowed by political and economic uncertainties arising from the U.K. vote to leave the EU and the U.S. presidential election.
Hong Kong is still the world’s largest Initial Public Offering (IPO) market, based on total funds raised in the past two years. However, the listings are heavily skewed towards financial firms, which made up 69 percent of funds raised last year.
Cautious Sentiment
On the domestic front there were concerns that Mainland China’s economy was slowing down and that interest rates would rise in response to the U.S. interest rate hikes. All these contributed to cautious sentiment among investors, and created a challenging market environment for the Group.
«The subdued market conditions were reflected in weakened average daily turnover (ADT) in the secondary market. Compared with the exceptionally high ADT of over HK$ 100 billion in 2015, cash market ADT fell below HK$ 70 billion for the year. At HK$ 66.9 billion, full-year 2016 ADT was down 37 percent from 2015,» said Charles Li Xiaojia, HKeX Chief Executive.
