- The 2026 Q1 financial report of the Hong Kong Stock Exchange (0388:HK) shows total revenue reached HKD 8.203 billion, a 20% year-on-year increase. Net profit attributable to shareholders hit HKD 5.188 billion, up 27% year-on-year, both achieving record highs for a single quarter.
- Market liquidity showed significant recovery, with the stock market's daily turnover exceeding HKD 300 billion on 20 trading days in the first quarter, demonstrating substantial participation from Mainland China funds and international institutional investors.
- The diversified business strategy was validated with record trading volume at the London Metal Exchange (LME), while the expansion of the "Swap Connect" mechanism drove systemic growth in over-the-counter derivatives settlement volumes.
Uplift in Spot Market Trading Center
Liquidity discounts in the Hong Kong spot stock market significantly eased in Q1 2026. There were 20 trading days in the quarter with turnover exceeding HKD 300 billion, not only indicating a shift from current competition but also showing that incremental funds are reallocating to offshore Chinese assets. This systemic elevation in trading centers directly boosted the transaction and settlement fees for the Hong Kong Stock Exchange (0388:HK). If such daily trading volume can be sustained in the medium term, expectations for a recovery in the valuation of Hong Kong stocks may be reinforced, attracting more passive index fund purchases.
Swap Connect and OTC Derivatives Growth
Under the narrative of RMB internationalization, fixed income and derivatives businesses are becoming new engines for balance sheet expansion at the Hong Kong Stock Exchange (0388:HK). CEO Nicolas Aguzin highlighted the continuous growth of "Swap Connect," which pushed OTC Clear's settlement volume to a new high. This mechanism provides international investors with an efficient tool to hedge onshore RMB interest rate risks. With the ongoing increase in foreign institutional holdings of Chinese domestic bonds, the hedging demand for interest rate swaps shows rigid growth. This improvement in the derivatives clearing network strengthens Hong Kong’s financial infrastructure as an offshore RMB pricing center.
Multi-Asset Platform and LME Momentum
The tail-end fluctuations of the commodities supercycle provided the exchange with substantial trading fee gains. The LME's fee-based trading volume reached a historical high in the first quarter, becoming a core profit contributor beyond the traditional spot stock business. In the context of global manufacturing supply chain restructuring and key mineral geopolitical dynamics, the hedging and speculative demand for basic metals like copper and aluminum has significantly increased among corporations and hedge funds. The surge in LME trading volume not only hedges against potential cyclical downturn risks in the single-stock market but also demonstrates the exchange's revenue smoothing capability across its asset platform.
Normalization of Primary Market Issuance
The vibrant IPO market is a crucial forward-looking indicator driving Q1's financial performance beyond expectations. The recovery of primary market financing capabilities marks the reopening of exit channels for capital and helps improve the asset turnover rate of semi-primary markets and private equity firms. As more quality companies complete IPOs in Hong Kong, the pool of tradable targets in the secondary market expands, injecting long-term liquidity into the spot market. If regulatory reforms in listing systems continue to yield benefits, the IPO pipeline of blue-chip and tech unicorns is likely to expand further in the second half, supporting the growth axis of annual core business revenues.
