Hong Kong Exchanges and Clearing Ltd (HKEx) posted a 73% increase in profit attributable to shareholders in the first half of 2015 to HK$4.10 billion ($527.8 million) due to its commercialisation strategy for the LME, higher trading and clearing fees and increased market activity.
For the first six months of the year, the group’s consolidated revenue and other income rose 48% year-on-year to HK$6.85 billion, and the LME’s contribution accounted for 19% as a result of its commercialisation programme.
““The uplift in revenue reflects a significant increase in the contribution from the Group’s UK operations as the post-acquisition commercialisation strategy for the LME yields returns. These include the increase in LME trading fees effective 1 January 2015 and the contribution from LME Clear, launched in September 2014,” the bourse said in a statement on Wednesday August 12.
HKEx's earnings before interest, tax, depreciation and amortisation (Ebitda) rose 65% to HK$5.27 billion.
The bourse’s results benefited “significantly” from the increase in Hong Kong market activity in both the cash and derivatives markets.
“The Mainland’s ongoing liberalisation of its economy and markets, and the gradual increase in the trading through the Shanghai-Hong Kong Stock Connect programme spurred investor confidence in the early part of the second quarter.”
“In June, the markets reacted rigorously to the uncertainty arising from the Greek debt crisis and the Mainland stock market adjustments.”
The average daily turnover in the securities market and the average daily trading volume of futures and options in the derivatives market were $125.3 billion and 808,377 contracts for the first six months of 2015, an increase of 99% and 54% respectively.
HKEx commodities segment
The commodities segment which comprises the London Metal Exchange business and the London mini futures listed on the HKEx saw ebitda in the first-half rise 99% to HK $632 million. Revenue rose 37% to HK$886 million.
Operating expenses dropped by $74 million to HK$254 million, mostly due to a reduction in legal fees for litigation over a number of class action lawsuits related to metal warehousing queues.
Average daily volume of metal contracts in the first half fell 3% to 695,588 lots due to weaker demand for industrial metals. Average traded volumes of aluminium fell 9%, zinc fell 4% while lead was flat. Copper and nickel daily volumes rose 4% and 2% respectively.
The LME continues to expand its business and product development initiatives, and subject to regulatory approval, plans to launch new LME Aluminium Premium (AP), LME Steel Scrap and LME Steel Rebar contracts in November 2015.
The AP contracts will be physically settled and the other two cash settled, the bourse said.