HKEx is a Hong Kong listed company and one of the world's leading international exchange groups. It provides a range of stocks, derivatives, commodities, fixed income products and other financial products and services. Its companies include the London Metal Exchange.
The interconnection between Hong Kong and the Mainland interest rate swap market was officially launched. The People's Bank of China, the Hong Kong Securities Regulatory Commission, and the Hong Kong Monetary Authority issued a joint announcement on developing interconnection cooperation between Hong Kong and the Mainland interest rate swap market (“Swap Connect”). Through the connection between Hong Kong and mainland infrastructure institutions, domestic and foreign investors can participate in the interest rate swap market between the two places.
According to the joint announcement, Hong Kong OTC Clearing Limited, a subsidiary of the Hong Kong Stock Exchange Group, and China Foreign Exchange Trading Center and Interbank Market Clearing House Co., Ltd. will carry out exchange cooperation to provide derivatives trading, clearing and other services to domestic and foreign investors.
The three parties jointly support the development of interchange services through the establishment of infrastructure connections. Overseas investors were initially supported to easily participate in interest rate swap transactions and clearing in the mainland interbank market. The three agencies have signed an interchange framework agreement to carry out various preparations for the official launch of the interchange. Swap Connect is an innovative initiative to continue deepening financial reforms and promote a high level of opening-up of mainland financial markets to the outside world. It is conducive to further strengthening in-depth cooperation between Hong Kong and mainland financial markets, promoting the healthy and stable development of the financial markets of the two places, and consolidating and enhancing Hong Kong's status as a financial center. The preparations are expected to take about 6 months, and the opening time will be announced after regulatory approval is obtained.
The first quarter results of the Hong Kong Stock Exchange declined, but showed strong resilience. During the period, spot market trading remained at a long-term normal level, and there was still an endless flow of IPO applications, such as Hong Kong's first SPAC listing and many new themed ETFs, as well as the launch of derivatives holiday trading and investment services. The company was affected by the global market atmosphere. The IPO market weakened slightly during the period, portfolio valuations declined, and commodity market prices fluctuated greatly. Revenue and other earnings for the first quarter of 2022 were HK$4.690 billion, down 21% from the record high recorded in the first quarter of 2021 (down 1% from the fourth quarter of 2021), and profit attributable to shareholders was HK$2,668 million, down 31% from the first quarter of 2021. However, we believe that with a series of favorable policies and market recovery, it is expected that future performance will bottom out and rebound.
Investment proposal: The three institutions signed the Swap Framework Agreement to carry out various preparations for the official launch of the Swap Connect. The company's performance declined significantly in the first quarter. With a series of favorable policies and market recovery, it is expected that future performance will bottom out. I recommend buying it.