HKEX 0388

[winston]

HKEx earnings plunge 49pc on low turnover by Katherine Ng, The Standard

Hong Kong Exchanges and Clearing (0388) said earnings fell 49 percent in the first three months of the year versus the same period last year as trading shrank.

Chairman Ronald Arculli said he expects the financial performance this year to suffer further amid a poor economic outlook, with the government forecasting that gross domestic product will shrink by 2 to 3 percent.

The local bourse operator said January-to-March net profit was HK$834.2 million, down from HK$1.65 billion in the same period a year ago. Daily turnover averaged only HK$44.7 billion, from HK$98.7 billion a year ago.

Revenue fell 41 percent to HK$1.34 billion, from HK$2.28 billion in the same period last year.

HKEx said net investment income fell by 64 percent to HK$133.9 million from HK$368.1 million a year ago, while funds available to invest were down 44 percent to HK$46.3 billion. Income from sales of information fell 16 percent to HK$154.8 million and listing fees were down 20 percent to HK$153.59 million.

Fees from trading, clearing and depository services were down 40 percent.

HKEx attributed lower net profits to the plunge in average daily turnover.

Daily turnover picked up in April, averaging HK$61.9 billion on strong fund inflows into Asian markets, which helped the local market recover from its lows in March. The share price rose to HK$118.30 on May 8, a 52-week high.

But "the latest news does not indicate that the grip of deep contraction has yet to ease," despite action by governments to help global markets, Arculli said in the statement yesterday.

Shares of HKEx yesterday closed at HK$109.80, edging up 0.37 percent after hitting a HK$112.50 intraday high in morning trade.

[winston]

DJ MARKET TALK: HKEx Off 3.1%; Morgan Stanley Tips Tactical Sell

1034 [Dow Jones] HKEx (0388.HK) down 3.1% at HK$100.50 falling more than HSI down 2.2% due to higher beta; short-term market volume key factor to watch with volume shrinking to HK$60 billion level Thursday, Friday after hitting plateau of HK$146.62 billion last Wednesday due to China Construction Bank (0939.HK) placement.

In tactical idea note published Thursday, Morgan Stanley advises investors to sell HKEx; says HKEx trading about 28X-29X revised FY09 earnings, implying ADT to persist around HK$100 billion on sustainable basis.

"The last time this happened, HSI was at 25,000 points," says MS; adds, to justify such ADT level from velocity perspective, HSI needs to move up sharply.

House's fair value on HKEx at HK$65; tips share price will fall relative to HSI over next 30 days, assigns 60%-70% probability for that scenario

[winston]

What can I say ? Why do we need this typed of Analysts ?

DJ MARKET TALK: HKEx +0.5% At Pre-Open; BNP Triples Target Price

0943 [Dow Jones] At pre-open, HKEx (0388.HK) quoted +0.5% at HK$116.00 despite broad market likely to open down, as stock likely in part helped by another eye-popping target price hike, this time from BNP Paribas, which bumps target to HK$139.50 from HK$42.64, upgrades stock to Buy from Reduce; says cash, derivative turnover picked up since 2Q09, current 24X FY09 P/E implies below HK$70 billion daily cash market turnover, prompting significant valuation upside.

House raises FY09-11 EPS forecasts by 40% each on higher turnover velocity assumptions, HSI target of 20,500. Earlier this week, Goldman Sachs more than doubled HKEx target price to HK$124 from HK$58

[winston]

Not vested.

* Bourse operator Hong Kong Exchanges & Clearing (0388.HK) jumped 4.6 percent to HK$125 after JP Morgan raised its rating on the stock to "overweight" from "neutral" on its increasingly stronger ties with mainland Chinese markets and signs of IPO activity picking up.

* "Although market turnover dominates the short-term performance of exchanges, we believe the potential for HKEx to leverage on the mainland and expand its market scale remains the key investment thesis that differentiates it from other exchanges in Asia," said JP Morgan analysts in a report, setting a target price of HK$158 on the stock.

[millionairemind]

Brazil and HK bourses soar in global rankings

By Jeremy Grant in London and Justine Lau in Hong Kong

Published: June 14 2009 23:37 | Last updated: June 14 2009 23:37

Two of the biggest bourses in Asia and Latin America have for the first time overtaken rivals in New York and London by market capitalisation in a sign of how the economic crisis and tough competition in mature markets is reshaping the global exchange landscape.

Hong Kong Exchanges and Clearing (HKEx) and Brazil’s BM&F Bovespa have vaulted ahead of NYSE Euronext, Nasdaq OMX and the London Stock Exchange in the value of shares in the exchange companies themselves.

HKEx is now the world’s second-largest exchange by market value, behind CME Group, the largest US futures exchange. BM&F Bovespa is in fourth place, after Deutsche Börse, the German exchange. The LSE has slipped to 10th place.

The recent stock market rally has boosted volumes at most exchanges. The monthly FTSE Mondo Visione Exchanges Index, released Monday, shows the the market value of listed exchanges rose by 27 per cent last month. That built on the previous two months’ rallies.

Herbie Skeete, managing director of Mondo Visione, said: “Shares of listed exchanges are up across the board from their lows of 2008. Derivatives markets are leading the pack, in part on hopes that US and European regulators plan to regulate over-the-counter derivatives, which could help exchanges.”

But the benefits of renewed market confidence have been felt less at the more established exchanges of New York and London. They face stiff competition from alternative trading platforms such as BATS and Direct Edge in the US and Chi-X and Turquoise in Europe.

The Brazilian and Hong Kong exchanges also benefit from ownership of their own houses for clearing trades, which generates added revenues. NYSE Euronext does not own a clearer. Nasdaq OMX will soon launch US equities clearing. The LSE owns an Italian clearing house but its contribution to group revenues is modest.

BM&F Bovespa has been closing down its trading pits and expanding into electronic trading to make it easier for overseas traders to access the exchange. Next month, the Brazilian bourse opens a London office.

Trading volume on HKEx has surged in recent months on the back of strong inflows from investors shifting to equities as they seek higher returns. HKEx shares have risen nearly 70 per cent since the start of the year.

Copyright The Financial Times Limited 2009

[winston]

* Exchange operator Hong Kong Exchanges & Clearing (0388.HK) (HKEx) jumped 3.5 percent to HK$123.90, despite fickle turnover in recent sessions, on expectations of closer co-operation with the southern Chinese province of Guangdong.

On Wednesday, the vice-chairman of the Guangdong securities regulator suggested that the central government allow people in Guangdong to invest in Hong Kong's stock market.

[winston]

DJ MARKET TALK: Busier 2H IPO Unlikely To Boost HKEx Much

0848 [Dow Jones] News funds raised from IPOs in HK will likely total US$12.8 billion in 2009 according to PricewaterHouseCoopers unlikely to boost HKEx (0388.HK) much; this despite amount of funds raised in IPOs so far this year fell two-thirds on-year to HK$17 billion (US$2.18 billion), suggesting accountancy firm expecting much better 2H. Still, even if this pans out, won't be major catalyst for HKEx as ADT bread-and-butter city's sole exchange operator; HK market volume withering recently, dropping to 3-month low of HK$50.05 billion yesterday; ADT (so far in June) average at HK$73.53 billion. HKEx ended Monday down 1.2% at HK$125.20 vs HSI down 0.4%.

[winston]

Bourse planning ETF boost by Katherine Ng and MandyLo, The Standard HK

Hong Kong Exchanges and Clearing (0388) will soon launch more exchange- traded funds to boost non-equity linked products, said chief executive Paul Chow Man-yiu. This will also boost income.

ETF assets under management currently stand at about HK$140 billion, with average daily turnover amounting to HK$1.8 billion. This accounts for about 2 to 3 percent of the main board's trading volume, Chow said.

Chow said a plan to allow ETFs to be cross-listed in Taiwan, the SAR and the mainland is still being arranged and no timetable can be set. But he added: "For Hong Kong, we are all ready."

Five Deutsche Bank Group ETFs covering Hong Kong, India, South Korea, Vietnam and the United States listed yesterday in Hong Kong, taking the total number of ETFs listed locally to 35.

Deutsche Bank plans to launch 50 new ETFs in four Asian cities in the coming 12 months, and 14 more in Hong Kong by the end of this year taking the total in the city to 20. "We aim to be in the top three in Asia Pacific within 18 months," said Deutsche Bank's ETF global head Thorsten Michalik.

Meanwhile, Chow brushed off suggestions that the local bourse should concentrate on equity listings. "Almost all exchanges in the world are focusing on equity and warrant products and we are no exception," he said, adding HKEx had introduced gold futures trading but was not too successful.

He said consultations on emission- related products began last week and consultations on flexi-options will be launched in September.

Chow said the territory's position as an international financial center would be strengthened if the Hong Kong Mercantile Exchange, which trades in commodities, is successful.

He said the two exchanges have their own development strategies and competition would result in better products and lower costs.

HKEx will monitor the development of Hong Kong Depositary Receipts and would simplify procedures, Chow said.

[winston]

Bourse operator Hong Kong Exchanges & Clearing (0388.HK) was up 3.4 percent on media reports Shenzhen may allow Chinese investors to invest directly in Hong Kong-listed stocks through a depository receipt system.

The speculation comes almost two years after Beijing proposed allowing individual Chinese investors to directly trade in stocks listed in Hong Kong in a scheme dubbed the through-train. The proposed scheme was soon postponed amid worries about huge capital outflows and the beginnings of a speculative bubble in the Hong Kong market

[winston]

From UOB-Kay Hian:-

We cut our fair price for HKEx from HK$46.00 to HK$44.90 which is based on 17.5x 2009 PE. The market (on average) is expecting a net profit of HK$4.5b in 2009 (down only 10% yoy) which is still too high given that the ADT for 2008 is expected to be about HK$76b while ADT was only HK$61b in Sep-Nov 08.

ADT continues to decrease on mom basis. Velocity is unsustainable. We expect sustained downgrades to consensus earnings to exert downward pressure on the share price.

At HK$46, they ask you to sell. At HK$130, they ask you to buy

DJ MARKET TALK: UOB Ups HKEx To Buy, Raises Target To HK$153.60

0850 [Dow Jones] STOCK CALL: UOB KayHian raises HKEx (0388.HK) target price to HK$153.60 from HK$116.00, upgrades stock to Buy from Hold; says with higher total market capitalization, increasing velocity, market turnover should increase going forward.

Adds, with weak 1H09 market turnover behind, one should focus on 2010 earnings. House lifts ADT assumptions for 2009 to HK$65.3 billion from HK$64.5 billion, 2010 to HK$90.3 billion vs HK$72.3 billion, 2011 to HK$94.8 billion vs HK$75.9 billion; accordingly raises FY09-11 earnings forecasts by 1%, 19%, 19% respectively. HKEx down 0.5% at HK$131.00 yesterday, catching breather after 5-day 14.9% run-up.