HKEX, Hong Kong’s stock market operator, reports 18% gain in 2023 earnings as CEO Aguzin exits after choppy 3 years

Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock exchange, said earnings jumped last year by the most since 2020 on the back of a surge in investment income and derivatives trading as CEO Nicolas Aguzin ends his tenure after a tumultuous three years.

Net profit increased 18 per cent to HK$11.9 billion (US$1.52 billion), or HK$9.37 per share, according to its stock exchange filing on Thursday, the biggest increase since a 22 per cent jump in 2020. Analysts tracked by Bloomberg had forecast the firm to generate HK$11.9 billion for 2023. It was also the highest earnings since it earned HK$12.5 billion in 2021.

It proposed to pay HK$3.91 per share in second interim dividend, bringing the total to HK$8.41 for the year, versus HK$7.14 in 2022, and maintaining the payout at 90 per cent of earnings.

Earnings in the final three months of 2023 declined 13 per cent to HK$2.6 billion from HK$2.98 billion in the same quarter last year as average transactions of equity products shrank amid a market sell-off.

“HKEX delivered a strong set of 2023 full-year results, fuelled by notable growth in its derivatives, fixed-income and currencies business,” Aguzin said in the report. “Despite the persistent challenging global backdrop and softer cash market, we are pleased to be reporting our second-best revenue and other income, and profits, on record.”

HKEX booked almost HK$1.5 billion net investment gain in its portfolio of global stock and bond holdings last year, compared with a loss of HK$48 million a year earlier. Its annual results were also aided by higher fees from handling a higher volume of derivative transactions.

Total derivatives trading rose 4 per cent last year to 612,000 contracts a day, while northbound bond transactions also rose 24 per cent to 40 billion yuan per day, HKEX reported.

Aguzin joined HKEX in May 2021 from JPMorgan Chase’s private banking unit, taking over the helm soon after the Covid-19 pandemic outbreak ravaged businesses and sent the city’s economy into a recession. China’s faltering post-Covid recovery also fanned an exodus of foreign investors, shrinking trading volume.

HKEX’s shares slumped 46.5 per cent on his watch through Wednesday, erasing HK$270 billion from its market value. The benchmark Hang Seng Index slipped 42 per cent over the same period. The stock was little changed at HK$245 before the results, and at the noon market trading break.

He decided in December against extending his contract and earlier this month opted to exit sooner than scheduled, citing a smooth transition in place.

Bonnie Chan Yiting, the co-chief operating officer, will take over the top post from Friday, while Wilfred Yiu Ka-yan, the current co-chief operating officer, will become her deputy.