Hong Kong Exchanges & Clearing Ltd. CEO Charles Li said the initial public offering market and stock trading in Hong Kong remained intact despite recent political unrest in the city.
"Our market is generally more correlated to global issues, and we do not see any direct impact from local events yet," Li said, adding that he is confident Hong Kong would emerge from the turmoil as it did following previous challenges including the SARS crisis in 2003.
Hong Kong has seen 10 weeks of demonstrations by pro-Democracy protesters, which brought hundreds of flights at the city's international airport to a standstill on Aug. 13 and 14.
Li told reporters in an Aug. 14 earnings briefing in Hong Kong that lower trading turnover on the exchange is largely due to investors' low risk appetite and gloomier sentiment resulting from global uncertainties such as the trade tensions between America and China and the U.S. Federal Reserve's interest rate policies.
The Hong Kong bourse posted a 3% year-on-year growth in net profit for the first six months of 2019, but trading fees and tariffs fell to HK$2.94 billion from HK$3.33 billion and stock exchange listing fees dropped to HK$847 million from HK$855 million. Higher investment income helped offset drops in trading and clearing, the company said.
The number of companies newly listed in the first seven months of the year totaled 100, 29.6% down from the 142 listed in the same period of 2018, according to data from the bourse. IPO proceeds dropped by 29.8% year over year to HK$83.95 billion. The average daily turnover of equities trading in July was HK$68.7 billion, down 23% from HK$89.6 billion a year ago.
"Market conditions are affecting IPO plans. Whether people choose to list or trade [on the bourse], these decisions are not in our favor ... I am hopeful and hoping that we will see [some big IPOs] at sometime in the future," Li said.
Amid macroeconomic challenges and political uncertainties, however, the exchange will also focus on cost discipline and technology innovation in the second half, while it continues to modernize product ecosystems across asset classes, according to Li.