Trade, shareholder profits fall at HKEx
Hong Kong Exchanges and Clearing Limited (HKEx), the operator of Hong Kong's securities and derivatives market, saw its profits attributable to shareholders for the first nine months drop to HK$3.22 billion ($415.46 million), down 15.73 percent year-on-year as the weak global economy crimped trading sentiment and cut into transfer fees, according to the third quarter report released by HKEx Wednesday.
Specifically, the average daily turnover value of securities on the Hong Kong Stock Exchange during the nine months ending on September 30 descended to HK$53.1 billion, down 27 percent from the same time in 2011. Meanwhile, average daily transactions of futures and options contracts declined 4 percent and 27 percent respectively over the same period.
Still, experts were optimistic that activity on the stock exchange would pick up again in the months ahead as more foreign capital makes its way into the market and the exchange moves to diversify its financial products, especially its yuan-denominated vehicles.
When the US Federal Reserve launched a third round of quantitative easing in September and pledged to keep federal fund rates near zero until the middle of 2015, capital began gravitating toward emerging markets, such as China, where opportunities for profit were greater, Sheng Hongqing, chief economist for China Everbright Bank, told the Global Times.
"As China gradually relaxes its grip on capital movements between the mainland and Hong Kong, global investors are pouring their money into Hong Kong, which is increasingly becoming a staging point to tap mainland growth," Sheng explained.
Market regulators in the region have also pushed forward several new investment products priced in renminbi over the past two months, a move which Nie Riming, a research fellow at the Shanghai Institute of Finance and Law, explained to the Global Times would promote market liquidity by giving holders of the yuan a place to put their mainland currency.
The Hong Kong Stock Exchange listed its first yuan-traded equity, for Hopewell Highway Infrastructure Limited, on October 29. The listing came less than a month after yuan currency futures debuted on the exchange. Including these two products, there are currently 50 yuan-denominated investment options available in Hong Kong, HKEx data show.
Recent pledges from central financial authorities to strengthen the cooperation between Hong Kong and the mainland may also soon result in an expanded Hong Kong equity market, Nie also said.
The China Securities Regulatory Commission is considering easing the requirements for mainland-based firms to list on the stock exchange in Hong Kong, according to a China Business News report last Friday, citing a source within the regulatory body.
(Global Times | 2012-11-7 | Reporter: Wang Fei'er)
