Hong Kong Exchanges: A Silver Lining to the Continued Softness in Trading Activity

Hinging on slower-than-expected economic recovery in China, wide-moat Hong Kong Exchanges, or HKEx, continued to show sluggishness in the cash and equity segments. In the March quarter of 2024, the EBITDA of the two segments was down 15% and 20% year on year, respectively, affected by reduced trading- and clearing-related fee revenue. The declines were partially offset by strong performance in the commodities business. Group EBITDA dropped 12% in the first quarter compared with the previous corresponding period, or PCP, to HKD 3.7 billion. Due to lower trade flows and smaller margin fund size, net investment income fell 13% year on year.