By Selena Li
HONG KONG (Reuters) -Hong Kong's bourse operator reported a 13% drop in first-quarter profit on Wednesday, as sluggish trading and muted listing activities weighed on its businesses.
The profit attributable to shareholders of Hong Kong Exchanges and Clearing Ltd (HKEX) fell to HK$2.97 billion ($379 million), but was slightly above analysts' forecasts of HK$2.82 billion compiled by LSEG.
The drop in profit highlights the challenges ahead for HKEX which has suffered since late 2020 from Beijing's crackdown on a broad range of industries and is struggling to revive listings and trading amid geopolitical tensions and economic volatility.
The bourse, once the world's top destination for initial public offerings, slid to the tenth spot in the first quarter in terms of funds raised via IPOs, according to data from Deloitte.
Profits for the bourse operator rose in the four quarters over October 2022 to September 2023, driven mostly by its own investment fund gains and a low base for the corresponding year-ago periods. Starting October 2023, sluggish trading and static listing activities has driven down its income.
HKEX announced key leadership changes this year, with Bonnie Chan coming on as CEO in March and the board set to elect a new chairman later in the day, as it looks to improve performance.
Chan said in a statement that "despite the prevailing backdrop" she was "optimistic about HKEX's ability to capitalise on the long-term growth of China, the considerable opportunities to connect with the fast growing capital hubs of Southeast Asia and the Middle East".
HKEX's revenue in the first quarter fell 6% to HK$5.2 billion, mainly due to shrinking trading and listing fee income.
The bourse operator, however, said its IPO pipeline remained "healthy" with 85 active applications.
A total of HK$4.7 billion were raised by 12 companies via IPOs in the first three months, down 30% from a year ago and the smallest such fundraising since 2009, data from Deloitte shows.
Bigger listings in Asia's financial hub remain elusive, with Alibaba (NYSE:BABA) last month deciding to ditch the IPO plan of its logistics unit citing dour markets outlook.
London Metal Exchange, owned by HKEX, saw its trading and clearing fees increase by 40% and 39%, respectively, in the first quarter, reflecting buoyant activity in metals' derivative trading.
($1 = 7.8339 Hong Kong dollars)