HKEX 2Q Growth Likely Driven by Strong Equities Trading Activity

Dow Jones08-10

0502 GMT - Hong Kong Exchanges & Clearing will likely post higher profit and revenue for 2Q, Michael Zhang, analyst at Citi Research, writes in a note. Citi expects revenue and profit to have grown by 13% each compared with a year earlier, thanks to strong Hong Kong equities trading driven by contribution from new listings, and strong activity to and from mainland China. IPOs picked up in 2Q, with 47 new listings compared with 40 in 1Q, Zhang notes. However, the exchange's income from margin funds will likely fall on a quarterly basis due to lower client margin requirements for products, Zhang adds. Citi retains its buy rating and trims its target price to 495.00 Hong Kong dollars from HK$530.00, assuming the stock trades at 31 times the price-to-earnings ratio of estimated 2027 earnings. Shares are 0.6% higher at HK$414.00.

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