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Hong Kong Exchanges and Clearing reported a 27 per cent fall in profit in 2016 as trading in the city’s securities market was subdued and its UK commodity business suffered from weakened global demand.

Hong Kong’s stock exchange reported net income fell 27 per cent to HK$5.77bn for the twelve months to December 31, coming in below analysts’ median estimate compiled by Bloomberg of HK$6.06bn. Record high trading in 2015 had lifted profits to $7.96bn.

Revenue for 2016 was down 17 per cent on the previous year at HK$11.11bn, coming in shy of expectations of HK$11.33bn. HKEx said this fall was linked to subdued activity in the cash market in Hong Kong and decreased commodities trading on the LME, though it saw increased trading of derivatives contracts on the futures exchange.

HKEx launched the Shenzhen-Hong Kong Stock Connect in December and said it will continue to broaden its connectivity scheme to other asset classes to “capture opportunities from the [renminbi's] internationalisation.

HKEx chairman Chow Chung Kong sees potential challenges for the current year:

Looking ahead into the rest of 2017, the operating environment for financial markets is expected to remain challenging. Despite some encouraging signs of better growth prospects in the US and Europe, many political and economic uncertainties remain. Capital markets in 2017 are likely to be volatile.

Copyright The Financial Times Limited 2017. All rights reserved.
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