Challenges and Turbulence for HKEX’s First Female CEO Bonnie Chan as Profits Decline by 13%

Amidst a challenging trading landscape, the Hong Kong stock exchange reported a 13% decline in profit for the first quarter, setting a tough start for newly appointed Chief Executive Officer Bonnie Chan. Despite surpassing analyst estimates, core revenue slid 7% during the period, reflecting the uphill battle faced by Chan as she steps into her role.

In a statement, Chan expressed optimism about HKEX’s potential to capitalize on long-term growth opportunities, particularly in China and emerging capital hubs like Southeast Asia and the Middle East. However, she acknowledges the daunting challenges ahead, including the sluggish IPO and trading activities amidst the struggling Chinese economy.

The exchange’s shares have plummeted nearly 60% since early 2021, mirroring the broader downturn in the city’s benchmark index over the past four years. Confidence took a further hit with the disappointing debut of Chinese bubble tea maker Sichuan Baicha Baidao Industrial Co., which plunged 27% on its first day of trading in 2024.

Despite these setbacks, HKEX remains hopeful about its listing pipeline, citing 85 active applications as of March-end. Additionally, recent initiatives by China’s top regulator to support Hong Kong’s market, including facilitating mainland companies’ listings and expanding investment options, have sparked a rally in shares.

Despite overall challenges, the exchange saw some bright spots in the first quarter, with robust trading activities through the Northbound Stock Connect and Northbound Bond Connect. However, Southbound flows into Hong Kong stocks experienced a decline. Derivatives trading showed resilience, posting a 14% increase, while equity product trading faced a 22% decrease. Operating expenses rose 8%, attributed to higher staff costs and one-off retirement benefits payable to senior management.

Chan’s appointment as the first female CEO brings a fresh perspective to HKEX, leveraging her extensive experience as co-chief operating officer and her background in law and IPO transactions. As she navigates the complexities of the financial landscape, Chan aims to steer HKEX towards growth and stability, capitalizing on emerging opportunities while addressing prevailing challenges.

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