This file photo dated Jul 31, 2021 shows the statues on the square of Hong Kong Exchanges and Clearing Limited in south China's Hong Kong. (WU XIAOCHU / XINHUA)

Hong Kong Exchange and Clearing reported its second-best quarterly revenue and profit in the first quarter, beaten only by the results for the first quarter in 2021.

Net profit attributable to shareholders for the three months ending March 31 increased 28 percent to HK$3.4 billion ($433 million) compared to a year ago, while revenue, mainly driven by the net investment income, saw a surge of 19 percent year-on-year to almost HK$5.6 billion in the same period, according to HKEX’s quarterly results released on Wednesday.

The derivatives markets performed strongly with derivative contracts traded up 6 percent year-over-year, but down slightly from the record high in the fourth quarter of 2022

Net investment income reached a record HK$1.5 billion, as interest rates increased throughout 2022 and the first quarter of 2023, as well as a rebound in the external portfolio.

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Despite ongoing challenges posed by the macroeconomic and high-interest-rate environment, as well as continued geopolitical tensions, HKEX said it believes the special administrative region’s equity market will play a vital role in connecting the Chinese mainland and the world as normal business activities resumed earlier this year.

The derivatives markets performed strongly with derivative contracts traded up 6 percent year-over-year, but down slightly from the record high in the fourth quarter of 2022.

The Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect operated smoothly in the first quarter, with the northbound and southbound turnover reaching 97 billion yuan ($14 billion) and HK$37.5 billion, respectively.

During the three months, HKEX welcomed 18 new listings and raised HK$6.7 billion, down 55 percent from the same period of 2022. However, the number of listing applications remained high, with more than 90 applications being processed as of March 31, 2023.

“As we look forward to the rest of the year, we will continue to execute on our strategy, ensuring that we are active proponents of global dialogue and connectivity, working with all our regional and international stakeholders to deliver shared sustainable success,” HKEX Chief Executive Officer Nicolas Aguzin said.

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Kenny Ng, securities strategist of Everbright Securities International, partially attributes the strong first-quarter performance of HKEX to the recovery of global capital markets.

Ng is positive on the outlook for HKEX’s performance in the following three quarters this year, which, he said, will be primarily driven by a foreseeable improvement in average daily turnover and a revival of the initial public offerings market as more Chinese mainland enterprises go public on HKEX.  

HKEX’s shares rose 1.23 percent on Wednesday to close at HK$329 apiece.

Contact the writer at irisli@chinadailyhk.com