HKEX Posts Record-High Profit for First Three Quarters, but Q3 Alone Dips 1% YoY
nashnova research
Hong Kong Exchanges and Clearing (00388) earned a record HK$15.427 billion in shareholder profit for the first nine months, up 15% year-on-year — yet Q3 profit slipped 1%, its first quarterly decline in over two years, as trading volumes cooled.
How much did the first nine months bring in?
Nine-month revenue and other income hit HK$24.569 billion, up 12% year-on-year; shareholder profit reached HK$15.427 billion, up 15% — both all-time nine-month records.
The engine: record trading volumes across cash equities, derivatives, and commodities, all rising in tandem and lifting core business revenue by 12%.
Nine-month EBITDA margin stood at 80%, up 1 percentage point. This means → HKEX was not just earning more, but earning more efficiently.
Why did Q3 cool off so sharply?
Q3 revenue came in at HK$7.867 billion, up just 1% year-on-year; profit was HK$4.859 billion, down 1% — the first quarterly year-on-year profit decline in over two years.
The drag: average daily turnover fell 11%, cutting cash-market and Stock Connect trading fees, while rebates paid to clearing participants rose. In plain terms = fewer trades meant less "toll revenue" per transaction, and the middlemen's cut grew — a squeeze from both sides.
Higher commodity and Shanghai/Shenzhen Connect volumes plus increased listing fees partially offset the drop, but not enough.
What does the quarter-on-quarter trend signal?
Q3 profit of HK$4.859 billion trailed Q2's HK$5.4 billion and Q1's HK$5.2 billion — a sequential contraction of roughly 10%.
This reflects a fading of the first-half boom that powered the record, not merely a year-on-year base effect.
Analysts had expected Q3 profit of about HK$4.7 billion; the actual result came in slightly above. This means → the market had already priced in a slowdown, and HKEX's miss was "less bad than feared."
What about investment income and margins?
Q3 net investment income from corporate funds was HK$353 million, up from HK$254 million a year earlier, driven by higher returns that also offset FX losses from the prior-year dollar-HKD decline.
Nine-month investment income totalled HK$1.436 billion, including a HK$307 million non-recurring gain from the revaluation of unlisted equity investments. In plain terms = that gain came from a paper mark-up on private holdings — it may not repeat every quarter.
Q3 EBITDA margin was 79%, down 2 percentage points year-on-year. Still exceptionally high in absolute terms, but the direction has shifted from "improving" to "slightly eroding."
How is management framing it — and what matters in Q4?
CEO Bonnie Y. Chan called the first nine months "robust," citing "active market trading" and highlighting the opportunity from global investors reallocating capital toward Hong Kong.
Key Q3 milestones: a competitiveness review of the listing regime, the launch of the first offshore-listed China government-bond futures, simplified board-lot sizes, and the debut of ETFs tracking new cross-market indices. This means → management is accelerating product and structural innovation while volumes cool, aiming to build recurring revenue that can cushion cyclical swings.
Whether Q4 daily cash-market turnover rebounds will be the critical test of full-year earnings sustainability — the first nine months are already in the record books, but the trend is weakening.
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