HONG KONG: Hong Kong Exchanges & Clearing, Asia's largest listed bourse operator, posted a fourth straight drop in quarterly profit as the global financial crisis battered trading volumes, though turnover picked up last month as funds bought into the mainland's growth prospects.

Market turnover, which accounts for the bulk of HKEx's earnings, improved in April as hefty fund inflows flooded the local market on optimism that the global economy is about to turn the corner, driven in part by continued growth on the mainland.

HKEx said persistent negative market sentiment had a significant impact on both the primary and secondary markets in the first quarter.

"Despite glimmers of hope that global fiscal policy stimulus may be working, with the economy sinking into recession, HKEx's financial performance is likely to be adversely affected," it said in a statement.

HKEx, valued at $15.2 billion, three times its Asian rivals Singapore Exchange and Australia's ASX Ltd, said it will work more closely with the central government and mainland exchanges to seek mutual benefits for their securities markets.

January-March net profit fell to HK$834.24 million ($107.6 million) from HK$1.65 billion a year earlier, lagging two analysts' forecasts for HK$891 million and HK$918 million.

Revenue dropped 41 percent to HK$1.34 billion as average daily share trading more than halved to HK$44.7 billion.

But the value of trading rebounded 39 percent in April to a daily average of about HK$62 billion, analysts said.

HKEx shares closed up 0.4 per cent at HK$109.80.

Reuters

(HK Edition 05/14/2009 page16)