Due to financial turbulence, HKEx saw its net profits for the first nine months this year slide 2 percent to HK$3.93 billion from HK$4.01 billion in the corresponding period. AP

Hong Kong Exchanges & Clearing (HKEx), operator of Asia's third-largest stock market, said its third-quarter net profits slumped 43 percent, extending declines in the previous quarter, as the global economic recession badly hit listing and stock trading activities.

Its net earning in the three months ended Sept 30 this year was HK$959 million, compared with HK$1.68 billion during the same period in 2007, the bourse operator said in a statement posted on its website yesterday. Its basic earnings per share tumbled 44 percent to HK$0.89.

The company's net profits for the first nine months this year slid 2 percent to HK$3.93 billion from HK$4.01 billion in the corresponding period last year.

The operator, which makes profits from trading fees paid by investors and listing fees paid by successfully listed candidates, received 36 companies selling shares on the mainboard, including 12 that were transferred from the Growth Enterprise Market (GEM).

Meanwhile, six mainboard-listed companies and two companies registered in GEM were delisted.

The company said its total capital, including post-listing funds, stood at HK$182.2 billion.

"Earnings in the city's bourse are likely to be under pressure for the next few quarters," said an analyst on conditions of anonymity. "The stock market will continue to be sluggish and few potential share issuers would dare to test the market," the analyst added.

The company saw its operating expenses soar as much as 46 percent in the three quarters this year, which led to a 30 percent drop in revenue.

It said the increased expenses were mainly due to higher staff costs, depreciation charges, IT and computer maintenance expenses as well as a provision for impairment losses from defaulting participants, including Lehman Brothers Group.

The collapsed US investment banking group wiped off HK$159 million from the exchange's balance book, HKEx said.

To lure more listing candidates, HKEx has been promoting itself in Asian and other neighboring regions such as Russia, to sell shares in Hong Kong.

"During the third quarter of 2008, HKEx visited Kaohsiung, Taichung, Taipei and Tokyo to attract more companies from different industries to list in Hong Kong," it said.

To offset the increasing cost, HKEx will also lift the rental for participants, it said.

(HK Edition 11/13/2008 page2)