HONG KONG (Reuters) - Hong Kong Exchanges and Clearing Ltd (HKEX) (HK:0388) warned the coronavirus outbreak had brought renewed uncertainty to its business, as it shrugged off political turmoil at home and abroad to post a small rise in annual profit on Wednesday.
A good market for initial public offerings and strong revenue from Stock Connect, which links the Hong Kong and Shanghai and Shenzhen exchanges, made up for a decline in trading volumes. HKEX's full-year net profit came in at HK$9.39 billion (930 million pounds), up from HK$9.31 billion a year earlier, but missed an average estimate of HK$9.49 billion of analysts polled by Refinitiv.
"With a phase one trade deal between China and the U.S., there are signs of recovery in investor confidence, although the current COVID-19 outbreak brings renewed uncertainty," HKEX said in a statement to the Hong Kong Stock Exchange, its subsidiary.
Amid political protests in Hong Kong, and the trade war, trading volumes dropped sharply in 2019, with the average daily turnover of equity products falling 18% in value compared with the year before.
Turnover did receive a boost from the listing of Alibaba (HK:9988) later in the year, however. Daily trading in the technology giant's shares averaged HK$3.7 billion between its November 26 listing and the end of the year, nearly 5% of the HK$75.8 billion average daily securities trading on the bourse in December. The bourse had good year for capital raisings, notably, Budwieser Asia's (HK:1876) $5.75 billion IPO, as well as Alibaba's $12.9 billion listing. Hong Kong ranked third globally for IPOs last year, after the Nasdaq and the Saudi Exchange, raising $25 billion excluding Alibaba's listing, according to Refinitiv data.
In response to the economic hit from the protests and the virus, Hong Kong unveiled a record budget deficit on Wednesday, boosting cash handouts to residents and tax concessions for companies.
Months of often violent protests began in June in response to a proposed law that would have allowed extraditions to mainland China, before morphing into broader pro-democracy campaign.
In 2019, HKEX also stunned investors with an audacious but ultimately unsuccessful bid to purchase the London Stock Exchange Group (LON:LSE).
The Hong Kong bourse said on Wednesday that "HKEX was unable to engage with the management of LSEG in realising its vision."