HONG KONG: Hong Kong Exchanges and Clearing (HKEx) said its third-quarter net earnings jumped 33 percent, benefiting from the pick-up in trading volumes and initial public offering (IPO) activity in the city.

Net profit for the July-September period rose to HK$1.27 billion in 2009 from HK$959.6 million in 2008, while its revenue also advanced 14 percent to HK$1.87 billion, the company said in its statement yesterday.

Average daily turnover, a key revenue driver of the bourse operator, leaped 5 percent to HK$66.7 billion in the third quarter, compared with HK$63.6 billion a year earlier. The third-quarter result for the HKEx, which is the world's second-largest listed exchange operator, was in line with the market forecast.

Analysts expect the robust IPO market and trading volume in Hong Kong will continue to boost the local bourse's earnings in the fourth quarter.

"IPO activity in the city will remain quite overwhelming in the fourth quarter. Satisfactory performance of the new listings may also spur turnover in the local stock exchanges," said Linus Yip, strategist at First Shanghai Securities.

He added that the average daily turnover of the HKEx may further improve in the fourth quarter, which may also boost the company's earnings in the coming quarter.

President of BMI Funds Management Patrick Shum said daily turnover in the bourse may reach an average of HK$70 to HK$80 billion by the end of this year, as foreign capital continues to flow into the city's asset markets.

"Meanwhile, transactions in the local stock market are usually more active by the year-end, as institutional investors and equity funds may push up share prices for a more prosperous investment return," Shum said.

He expects the daily turnover may even amount to HK$100 billion for a few single days in the fourth quarter.

The market has been concerned that the growth enterprise (GEM) board in Shenzhen, which debuted on October 30, may challenge the competitiveness of the Hong Kong Stock Exchange.

Securities house Macquire said in a recent research note that the introduction of the growth enterprise board at the Shenzhen Stock Exchange will to some extent "reduce the attractiveness of the GEM board in Hong Kong".

Analysts, however, suggest that the start-up of the second board market in Shenzhen may impact its Hong Kong counterpart only over a longer term.

"I don't think many Hong Kong companies will propose listing in the ChiNext board in the near term. The Hong Kong bourse is still more favorable for listing, in terms of its international exposure," Shum said.

Moving against the 1.61 percent surge in the benchmark Hang Seng Index yesterday, shares in HKEx closed down 0.28 percent, or HK$0.40, at HK$141.4.

(HK Edition 11/12/2009 page3)