Hong Kong Exchange Profits and Blockchain

Hong Kong Exchange Profits and Blockchain

Hong Kong Exchange Profits and Blockchain

The stock exchange operator of Hong Kong, which was the world’s No. 1 IPO market in 2015 and 2016, is benefiting from an improvement in investor sentiment that has translated into
higher trading activity.

First half profit at Hong Kong Exchanges and Clearing increased by 17 percent to HK$3.49 billion, or earnings per share of HK$2.86.

The bourse operator announced today revenue climbed to HK$6.2 billion, up 10 per cent, from the year before period.

Revenue and other income increased mainly due to a significant increase in net investment income of HK$466 million and a one-off gain of HK$55 million post liquidation interest from Lehman’s liquidators. Excluding these items, revenue increased by 1 percent with higher volumes in the cash market being offset by lower volumes in Hong Kong Futures Exhange and the LME.

The HKEx declared an interim dividend of HK$2.55 per share compared with HK$2.21 per share in 2016, for the year ending December 31, 2017.

The Hong Kong Stock Exchange (HKEX) is planning to launch a blockchain-powered private market aimed at helping smaller firms obtain financing.

HKEX chief executive Charles Li detailed the plan, which would play out through a separate venture dubbed HKEX Private Market, in an August 1 note.

The disclosure came in response to a question about tapping local technology resources – and whether Hong Kong is positioned to do so. Though no firm launch date has been disclosed, Li said that the platform would kick off sometime in 2018.

“The Private Market will serve as a ‘nursery’ for early stage companies before they are ready to enter public markets,” he explained. “They can conduct pre-IPO financing and other activities on an off-exchange venue not under the regulatory remit of the Securities and Futures Ordinance.”

As reported previously, Li has been eyeing on the blockchain technology to upscale the operation of HKEX. Earlier this year, during a media event, Li disclosed a three-to-four year plan to reduce costs at the exchange, which could ultimately move to integrate the tech into its post-trade systems.

Hong Kong’s central bank has also tested the tech, disclosing in April that it had been testing a digital currency along with several unnamed banks and distributed ledger startup R3.


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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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