(Yicai) March 1 -- The Hong Kong Exchanges and Clearing, operator of the Hong Kong Stock Exchange, defied a sluggish stock market to record its second-highest net profit and revenue last year, second only to its haul in 2021, thanks to successful investments.

HKEX posted a 18 percent jump in net profit in 2023 from a year earlier to HKD11.9 billion (USD1.5 billion), according to its latest earnings report released yesterday. Revenue surged 11 percent to HKD20.5 billion (USD2.6 billion).

This is despite the average daily turnover on the Hong Kong bourse slumping 16 percent last year from the year before to HKD105 billion (USD13.4 billion), which meant that HKEX’s transaction and settlement fees took a huge hit.

Transaction fees and charges to use the trading system plunged 18 percent year on year to HKD769 million (USD98.2 million), while settlement and clearing fees plummeted 12 percent to HKD2.9 billion (USD380 million), the report said.

The IPO market also underperformed. Only 73 companies went public in Hong Kong last year, a dive of 19 percent year on year. They raised less than half of what was raised in 2022 at just HKD46.3 billion (USD5.9 billion). The fees HKEX earned from listings slumped 8 percent to HKD908 million (USD116 million).

But despite the doom and gloom, HKEX’s revenue kept climbing, propelled by strong returns on investments. The firm raked in HKD1.4 billion (USD178.8 million) from investments last year, compared with a loss of HKD48 million (USD6.1 million) in 2022. This turnaround was driven by fair value gains on its external portfolio of HKD421 million and greater returns from internally-managed corporate funds.

Its revenue from margin funds and clearing house funds, amounting to HKD3.4 billion (USD434 million), hit a new high with a net return of up to 1.64 percent thanks to rising interest rates on Hong Kong dollar and US dollar deposits.

Investor confidence is still being affected by geopolitical influences, Chief Executive Officer Nicolas Aguzin said at the earnings call. But this does not mean that HKEX needs to change its development model. The connectivity between mainland China and other parts of the world is HKEX’s strength.

This was Aguzin's final presentation as CEO. He was replaced today by HKEX’s first female CEO, Chan Yiting, who will hold the reins for the next three years.

Editor: Kim Taylor