February 28, 2018 / 6:21 AM / 9 months ago

UPDATE 1-Hong Kong exchange's FY profit jumps as new listings hit record

* FY2017 profit rises to HK$7.4 bln, meets estimates

* Listings in 2017 hit all-time high with 174 firms making debut (Adds details on trading income and listing, CEO comment)

By Sumeet Chatterjee

HONG KONG, Feb 28 (Reuters) - Hong Kong Exchanges & Clearing Ltd (HKEX) posted a 28 percent rise in 2017 profit on Wednesday, bolstered by a jump in listing fees and trading charges as more Chinese companies turned to the Asian financial hub to raise funds.

A record 174 companies raised a total of HK$128.5 billion ($16.41 billion) in Hong Kong last year, ranking HKEX as the third-busiest exchange globally in terms of initial public offerings (IPOs), said HKEX Chief Executive Charles Li.

“Building on the solid groundwork and the significant progress already made, we strive to make our IPO market more relevant, our equity market more connected, and our derivatives market more competitive,” he said.

HKEX has been working on a broader plan to woo big privately owned Chinese technology companies to list in Hong Kong, including giants such as Alibaba Group Holding and Baidu that are listed in New York.

The stock exchange operator, which also owns the London Metal Exchange (LME), said profit rose to HK$7.4 billion ($945.23 million), up from HK$5.8 billion in 2016, meeting the average estimate of 18 analysts polled by Thomson Reuters.

Hong Kong bankers are eyeing a slew of blockbuster IPOs mainly from Chinese technology firms with a total market capitalisation of some $500 billion over the next two years.

In 2017, major listings in Hong Kong included ZhongAn Online Property & Casualty Insurance Co’s $1.5 billion IPO and market debut by Tencent’s e-book unit China Literature Ltd that raised $1.1 billion.

In spite of Hong Kong’s role as the world’s biggest equity capital-raising centre for four of the last 10 years, it has fallen well behind New York, its arch-rival, in the battle for hot tech stocks and other growth sectors.

The exchange’s total trading fees jumped 42 percent in 2017 to nearly HK$1.7 billion, while stock exchange listing fees rose 8 percent to HK$828 million, it said in a statement.

Earnings before interest, tax, depreciation and amortisation (EBITDA) from its commodities segment fell 19 percent to HK$777 million, after its LME unit cut trading fees late last year and operating costs rose.

Revenue from trading fees and tariffs at the commodities unit, which has yet to revive trading volumes, fell 9 percent to HK$1.1 billion while overall volumes for the year rose by just 1 percent, the company said. ($1 = 7.8289 Hong Kong dollars) (Reporting by Sumeet Chatterjee; additional reporting by Melanie Burton; Editing by Gopakumar Warrier)

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