The Hong Kong Stock Exchange building Photo: VCG

 
Hong Kong has moved to shore up its position as a global financial center by “playing better the role of super-connector” between the East and West despite multiple challenges, with a range of measures in operation or to be announced.

 

Hong Kong Exchanges and Clearing Limited (HKEX) reported its first annual profit drop in six years, falling within market expectations, against a challenging macroeconomic and geopolitical backdrop.

 

Net profit fell 20 percent year-on-year to HK$10.08 billion ($1.28 billion) last year, while revenues declined 9 percent to HK$18.73 billion, according to the statement released by the HKEX on Thursday.

 

Hong Kong remained as one of the world’s most active IPO fundraising hubs with 90 listings, raising a combined $104.6 billion, 65 percent of which was for the new economy sector, putting Hong Kong in the top four markets globally in 2022.

 

HKEX delivered solid results with the second half of the year showing signs of encouraging momentum in the IPO market and a particularly strong performance in derivatives trading. Results for the final quarter of the year were the best fourth quarter on record, the exchange operator said.

 

Although the broader challenges of 2022 including inflationary pressures, geopolitical tensions, and possible flare-ups of the COVID-19 pandemic, there are still many opportunities ahead, said CEO Nicolas Aguzin.

 

“The massive opportunities arising from China’s ambitious decarburization plans will continue to grow. We will continue to see the release of Chinese mainland’s domestic savings, the exponential growth of investment flow in and out of the mainland, and the acceleration of international participation in the economy,” Aguzin said.

 

Average daily turnover of the Northbound Bond Connect, one of the channels for offshore investors to participate directly in China’s onshore bond market, reached a record high of 32.2 billion yuan ($4.7 billion), up 21 percent year-on-year, according to the HKEX.

 

In unveiling his 2023-24 budget plan on Wednesday, Hong Kong Financial Secretary Paul Chan Mo-po said in his speech that the stock exchange operator will study a series of proposals on the optimization of its trading mechanism, including “arrangements for maintaining operation for the market under inclement weather.”

 

Currently trading is halted when severe weather warnings are raised.

 

After consulting the market, the HKEX will introduce a listing regime for advanced technology companies in the first quarter of this year to expand the listing channel for issuers. It will also forward specific reform recommendations on GEM within this year after carefully considering the views of various market players, Chan said.

 

In response to the Hong Kong government’s budget plan, Aguzin said “HKEX is committed to playing a key role in supporting the government’s plans to develop Hong Kong’s financial markets, building the Marketplace of the Future by delivering on a broad range of announced and planned strategic initiatives that will further enhance the quality of our listing regime, develop our market infrastructure and expand our product range.”

 

Hong Kong has been ramping up efforts to revitalize its COVID-hit economy and consolidate its position as one of the most important international financial hubs. All its measures rolled out or in planning aim to support its attractiveness as a unique connector between the East and West, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Thursday.

 

With the financial environment estimated to be relaxed in the second half of the year, it is expected that the pressure on the Hong Kong stock market will subside accordingly, he said.

 

Global Times