Core Viewpoint - Hong Kong Exchanges and Clearing Limited (HKEX) reported strong financial results for the first half of 2025, with total revenue reaching HKD 14.08 billion, a year-on-year increase of 33%, and net profit rising by 39% to HKD 8.52 billion, indicating robust market activity and a resurgence in IPOs [1] Financial Performance - In 1H25, HKEX's main revenue was HKD 12.95 billion, up 34% year-on-year, excluding investment income and charitable donations [1] - The EBITDA profit margin for 1H25 was 79%, an increase of 6 percentage points year-on-year [1] - For 2Q25, main revenue was HKD 6.64 billion, reflecting a 32% year-on-year growth and a 5% quarter-on-quarter increase, with net profit at HKD 4.44 billion, up 41% year-on-year and 9% quarter-on-quarter [1] Revenue Breakdown - Revenue sources for HKEX in 1H25 included: - Trading fees: HKD 4.91 billion (38%) - Clearing and settlement fees: HKD 3.16 billion (24%) - Investment income: HKD 2.88 billion (22%) - Listing fees: HKD 0.82 billion (6%) - Custody and agency services: HKD 0.67 billion (5%) - Market data fees: HKD 0.57 billion (4%) [1] - Year-on-year growth rates for various fees included: - Trading fees: +49% - Clearing and settlement fees: +48% - Listing fees: +13% - Custody and agency services: +23% - Market data fees: +6% - Investment income: +14% [1] Market Activity - The average daily trading (ADT) for cash stocks in 2Q25 was HKD 220.3 billion, a 97% year-on-year increase, while the average daily volume (ADV) for derivatives decreased by 2% year-on-year and 18% quarter-on-quarter [2] - The IPO market saw 44 new listings in 1H25, raising HKD 109.4 billion, which is eight times the amount raised in 1H24 [3] - The number of IPO applications in process at the end of 1H25 was 207, compared to 84 in 2024, indicating a strong pipeline for future listings [3] Investment Income - Investment income contributed over 30% to net profit, with HKEX reporting investment income of HKD 1.54 billion in 2Q25, a 31% year-on-year increase [3] - The increase in investment income was driven by a rise in margin trading and non-recurring foreign exchange gains due to currency fluctuations [3] Future Outlook - The company has raised its profit forecast for 2025, expecting net profits of HKD 16.9 billion, HKD 17.9 billion, and HKD 18.8 billion for 2025-2027, reflecting year-on-year growth of 30%, 6%, and 5% respectively [4] - The outlook is positive due to the anticipated return of high-quality Chinese assets to the Hong Kong market and the extension of connectivity between mainland China and Hong Kong [4]