Hong Kong Exchanges & Clearing saw record-high profit for the fourth consecutive year in 2007. Profit attributable to shareholders rose 145% to $6.2 billion. A total dividend of $5.19 per share was recommended, up 144% on a year earlier.

HKEx recorded an $8.4-billion income, up 102% on a year earlier, with operating expenses up 17% to $1.4 billion. The profit before taxation amounted to $7.2 billion.

The rise in total operating expenses was mainly due to increases in staff costs and premises expenses driven by buoyant job and property markets, and higher legal and professional fees.

Profit attributable to shareholders rose 145% to $6.2 billion, mainly due to higher turnover-related income, higher net investment income and the one-off gain on disposal of an associate during the year.

A final dividend of $3.40 per share will be paid to shareholders on April 24. Together with the interim dividend of $1.79 per share, it will bring the total dividend distribution for the year to $5.19 per share.

Investment fund

The group's total assets rose 117% to $87.9 billion, with shareholders' funds and net assets per share up 59% to $8.4 billion and $7.83.

The funds available for investment comprise Corporate, Margin and Clearing House Funds totalling $49.7 billion on average in the year, while the overall size of funds available for investment rose 130% to $69.1 billion.

Working capital rose 72% to $7.4 billion, primarily due to the $6.1 billion profit generated during the year.

The year saw 82 companies newly listed on the Main Board and two companies on the Growth Enterprise Market. Total capital raised, including post-listing funds, reached $509.4 billion. The number of companies listed on the Main Board and Growth Enterprise Market were 1,048 and 193.

The average daily turnover value on the Stock Exchange hit $88.1 billion, up 160% over a year earlier. The average daily number of derivatives contracts trade on the Futures Exchange rose 71% to 171,440, while that of stock options contracts traded on the Stock Exchange grew 156% to 187,686.

Derivatives market

There were 4,483 derivative warrants, seven real estate investment trusts, 17 Exchange Traded Funds, 131 Callable Bull/Bear Contracts and 175 debt securities listed in 2007. The average daily turnover of the derivative warrants reached $19.1 billion, accounting for 22% of the total market turnover.

The number of Callable Bull/Bear Contracts has been growing rapidly with total market turnover of $71.4 billion. The year saw 391 contracts newly listed on the securities market, compared with 83 in 2006.

Eight additional Exchange Traded Funds were launched in the year, of which seven tracked the performance of shares listed on the Mainland, as well as regional and overseas markets. The year saw 17 funds listed on HKEx with total turnover of $160.6 billion.

For the derivatives market almost all futures and options contracts set records in 2007. Total turnover grew 105% over a year earlier to 87 million contracts, while the turnover of stock options rose 154% to 45 million contracts.

H-shares

Hang Seng China Enterprises Index products also saw strong growth with the volume of H-shares Index Futures and H-shares Index Options up 122% to 11 million contracts and 128% to 1.7 million contracts.

Group chairman Ronald Arculli said the US sub-prime loan crisis has affected Hong Kong. The concerns of economic recession in the US and the uncertainties to the global financial markets are still unfolding and it is difficult to assess the extent of its impact on Hong Kong's markets.

He said investors should be vigilant about adverse factors such as rising inflationary pressures under a negative interest environment, tightening measures in the Mainland to forestall its overheating economy, and the possible adjustments in the global investment environment, though the Mainland and Hong Kong's economic fundamentals have been strong.

Stock codes

HKEx will continue to seek improvements to the quality and foundation of Hong Kong's financial markets to withstand changes and achieve long-term growth.

Mr Arculli said the group plans to launch five-digit stock codes in the second quarter due to market momentum and strong investor demand for product variety.

It will also upgrade its information system capacity and technology this year. It will enhance its central clearing and settlement system's data storage and the LAN infrastructure to be able to handle five million trades per day in March.

It will also strengthen the hardware technology of middle-tier subsystems of the settlement system in August, and further upgrade its market systems to support 7.5 million trades per day by year's-end.