REFILE-UPDATE 1-Hong Kong Exchange reports 2 pct rise in Q1 profit

Thu May 8, 2014 2:03am EDT

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(Changes 'last month' to 'in March' in final paragraf)

* Q1 net profit hits $152.22 million

* HKEx shares up 18.4 pct since April

* IPO filings drop after stricter rules take effect

HONG KONG, May 8 (Reuters) - Hong Kong Exchanges & Clearing Ltd, the world's sixth-largest exchange operator by market value, posted a 2 percent rise in net profit on Thursday, helped by a rise in new listings that came just before the introduction of stricter IPO rules.

HKEx posted first-quarter net profit of HK$1.18 billion ($152.22 million), up from HK$1.16 billion a year ago, while total income grew 5 percent to HK$2.34 billion.

The number of new listings on the exchange doubled to 20 in the January-March quarter, raising HK$112.4 billion, while average daily turnover of equity products fell 5 percent to HK$55.1 billion.

"The economic growth rate in the mainland of China could continue to dampen investor sentiment and capital flows into our markets," HKEx said in a statement, adding it was "optimistic about the opportunities ahead of us."

The sharp rise in new listings came just before the exchange introduced stricter IPO rules in April aimed at cracking down on sloppy underwriters and issuers. Since the new rules came into effect in April, only six companies have submitted listing applications, HKEx data show..

The volatile equity market also saw WH Group, the world's biggest pork producer, pull its planned $5.3 billion Hong Kong IPO.

HKEx shares have risen 18.4 percent since April on optimism that China's decision to allow cross-border stock investments between Shanghai and Hong Kong will boost trading turnover..

The China Securities Regulatory Commission (CSRC) said last month the pilot scheme would allow mainland investors to trade shares in designated companies listed in Hong Kong and let Hong Kong investors buy shares in Shanghai-listed firms.

"We believe that this represents a significant milestone in the further opening up of the mainland's capital markets and the promotion of the internationalisation of the renminbi," HKEx said in a statement. "This will provide new opportunities and create further momentum for the development of the Hong Kong capital markets," it added.

Separately, the HKEx said a total of 26 class action lawsuits has been filed against the London Metal Exchange Group, 24 of which have been consolidated into three complaints to account for three different classes of plaintiffs. As of May 7, the claims had not yet been served, HKEx said on Thursday.

LME and HKEx management continue to take the view that the lawsuits are without merit and will contest them vigorously, they said.

HKEx also said the LME applied to the Hong Kong Court of Appeal on May 2 to seek permission to appeal against a court ruling it lost to Russian aluminium producer United Company Rusal Plc in March, which halted a major reform aimed at cutting backlogs at warehouses. The LME continues to believe that Rusal's complaint is without merit and is currently considering its options.

(1 = 7.7519 Hong Kong dollars) (Reporting By Lawrence White; Additional reporting by Melanie Burton and Denny Thomas; Editing by Matt Driskill)

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