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

Hong Kong Exchanges and Clearing (HKEX) saw its net profit jump 31 percent year-on-year in the first half to HK$6.31 billion ($805.9 million), as rising investment income and derivatives volumes made up for lackluster trading turnover and lower listing fees.

The city’s bourse operator reported that half-year revenue rose 18 percent year-on-year to HK$10.58 billion, according to its interim results released on Wednesday.

The global capital market went through a rough patch in the first six months of the year, witnessing stress in the US and European banking sectors, global macroeconomic challenges, inflationary pressures and continued geopolitical tensions

It declared an interim dividend of HK$4.5 per share, up 30 percent from a year earlier.

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HKEX CEO Nicolas Aguzin said it was a good half-year for the firm despite the continued global macro uncertainty and market fragility.

“This strong half-yearly and quarterly financial performance was matched by further significant strategic progress in the second quarter, including the launch of Swap Connect, the launch of our new Dual Counter Model and the opening of HKEX’s first North American office,” Aguzin said.

“The group also continued to benefit from the positive impact of its diversification strategy, with robust growth in derivatives volumes, a strong performance from Stock Connect, and good returns from a burgeoning exchange-traded funds (ETFs) market,” he added.

The global capital market went through a rough patch in the first six months of the year, witnessing stress in the US and European banking sectors, global macroeconomic challenges, inflationary pressures and continued geopolitical tensions.

Market fragility in the first half has led to a 16 percent year-on-year decrease in average daily turnover to HK$115.5 billion in Hong Kong’s securities market.

During the same period, the stock exchange saw 33 IPOs, raising a total of HK$17.9 billion. That was down from HK$19.7 billion in the same period a year earlier.

But the high-interest-rate environment has helped growth in HKEX’s net investment income to the record half-yearly high of HK$817 million.

The ETF market saw its average daily turnover up 21 percent to HK$11.7 billion. Meanwhile, the average daily volume of futures and options contracts traded up 5 percent year-on-year.

As the operator of one of the world’s largest stock exchanges, HKEX has played an essential role in supporting the mutual development of Hong Kong and Chinese mainland’s capital markets.

“The inclusion of international companies in the southbound Stock Connect and expansion of eligible stocks in the northbound Stock Connect in March 2023 opened up greater investment choices for investors, bringing more liquidity and vibrancy to our markets, while enhancing HKEX’s competitiveness in attracting more international companies to list in Hong Kong,” HKEX Chairman Laura Cha Shih May-lung said.

She also cited the successful rollout of the Swap Connect in May as a key milestone, saying it’s the world’s first derivatives mutual-market access program.

“The launch of the HKD-RMB Dual Counter Model and the Dual Counter Market Making Program in HKEX’s securities market on June 19 marked another important step forward in building a liquid and accessible RMB ecosystem and enriching Hong Kong’s RMB product suite, further supporting the ongoing internationalization of the RMB,” she added.

Looking forward, CEO Augzin said there are “encouraging signs” of a revival in the IPO market, matched by a “very healthy pipeline”, whilst the macro landscape will continue to shape market sentiment.

According to the bourse operator, there were 104 active applications for listing as of June 30.

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HKEX’s share closed on Wednesday with a modest loss of 0.66 percent to HK$299.6.

Goldman Sachs maintained a “buy rating” on HKEX, setting a price target of HK$400. This represents an increase of more than 30 percent from the current price level.

The broker said in its research note that the market is expected to focus on future IPO trends, the possibility of a reduction in stamp duty, and how the exchange will enhance stock market liquidity.

Contact the writer at evanliu@chinadailyhk.com