Hong Kong Exchanges & Clearing's profits up 32% to $2b in Q3

The increase in operating expenses was offset by IT cost savings.

According to UOB Kay Hian, the Hong Kong Exchanges & Clearing recorded 3Q17 earnings of HK$2.0b, up 32% yoy, largely in line with their estimate. 9M17 earnings came in at HK$5.5b, up 21% yoy, and accounted for 76% of the firm's full-year estimate.

UOB Kay Hian lists key positives and key negatives for HKEx:

Key positives:

a) the cash market benefitted from improved market sentiment, with ADT of equity products up by 31% yoy in 3Q17,
b) trading volumes of Stock Connects continued to grow steadily. Northbound and Southbound ADT was 11% and 28% higher respectively compared with 2Q17. Total revenue from Stock Connects was HK$115m in 3Q17, which accounted for around 3% of total revenue,
c) 27% yoy increase in stock exchanges’ listing fees was mainly due to an increase in the number of listed companies and newly-listed derivatives products,
d) net investment income was up by 74% yoy in 3Q17 due to higher interest income from margin fund and fair value gains on collective investment schemes.

Key negatives. Operating expenses rose by 5% yoy in 3Q17, mainly due to a 16% yoy rise in staff cost. However, overall increase was offset by IT cost savings.