Financial Performance - The company reported total revenue and other income of $19.19 billion, an increase of 18% year-on-year, with core business revenue up by 24% driven by trading and clearing fees in the cash market [6][13] - Profit attributable to shareholders reached a record high of $11.5 billion, up 23% year-on-year, with earnings per share (EPS) and dividend per share also at record levels, both up 22% from 2019 [7][13] - Net investment income decreased by 18% to $2.2 billion compared to $2.7 billion in 2019, reflecting a challenging investment backdrop [7][21] Business Segment Performance - The IPO market remained strong, with the company ranking second globally, raising HKD 400 billion (approximately $50 billion), the highest in the last decade [8][34] - Stock Connect revenue reached a new record high of $1.9 billion, contributing to 10% of the total revenue, with both Northbound and Southbound average daily turnover (ADT) more than doubling compared to 2019 [19][20] - Listing fees increased by 16% with 154 new company listings in 2020, while corporate items were down due to lower net investment income [20] Market Data - The company experienced record average daily turnover (ADT) of $129.5 billion, reflecting strong market activity [13] - The Southbound Stock Connect has shown significant growth, contributing to liquidity in the market [66][71] Company Strategy and Industry Competition - The company aims to leverage the emerging new economy sector, focusing on tech and biotech stocks, which have become increasingly significant in the market [27][30] - The company is expanding its Stock Connect program and enhancing its product ecosystem, including the introduction of MSCI contracts to establish itself as a risk management center for the region [40][41] - The company is also focusing on sustainable finance, having launched the first multi-asset sustainable investment product platform in Asia [45][46] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the strong IPO pipeline and anticipated a busy year ahead, despite potential challenges from the low interest rate environment [48][50] - The management acknowledged the impact of the recent stamp duty increase but emphasized the overall robustness of the market and the need for a comprehensive approach to maintain competitiveness [56][60] Other Important Information - The company has made significant investments in talent and technology to support growth and operational resilience, with operating expenses up 8% excluding charitable donations [23][94] - The company is working on initiatives such as ETF Connect and Asia Index Futures to enhance its offerings and meet market demand [88] Q&A Session Summary Question: Insights on the recent stamp duty tax hike - Management was not consulted regarding the stamp duty change and expressed disappointment, noting that the market's robustness is driven by various factors beyond costs [56][58] Question: Potential for further stamp duty changes - Management could not speculate on whether the stamp duty change would be one-off or if further hikes might occur, emphasizing the need to focus on current market conditions [63][65] Question: Breakdown of strong trading volumes - Management indicated that approximately 25% of the strong trading volumes are driven by new economy stocks, with overall positive market sentiment contributing to the increase [66][67] Question: Plans to mitigate the impact of increased costs - Management highlighted that while transaction costs are significant, improvements in market efficiency and execution certainty have been made, which may help cushion the impact [76][78] Question: Impact of stamp duty on investor behavior - Management believes that the recent changes will not significantly alter investor behavior, as many investors prefer trading in Hong Kong for time zone advantages [80][82] Question: Update on Southbound Stock Connect and related initiatives - Management confirmed ongoing work on initiatives like ETF Connect and Asia Index Futures, with no specific timetable yet available [88][89]
HKEX(HKXCY) - 2020 Q4 - Earnings Call Transcript