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Shares of the Hong Kong Exchanges and Clearing (HKEX), the operator of the Hong Kong Stock Exchange, slid as much as over 3% to hit HK$298, the lowest level since June 2020.
Nomura in its latest research note lowers the target price on HKEX to HK$388.02 from previous HK$412.19 and maintains a Buy rating.
The bank lowered the forecast of HKEX’s net profit in 2022/23 by 7% and 6%, respectively, and also cut the forecast of the average daily stock trading turnover in the two fiscal years by 7% and 8%, respectively, to HK$129 billion and HK$145 billion.
Nomura expects the HKEX’s third-quarter revenue to decline by 20% from a year earlier to HK$4.2 billion, which would be 9% lower than market consensus, as the weak momentum in cash equities business is expected to last until the third quarter.
The bank expects the HKEX’s net profit in the third quarter to decrease by 30% year over year to HK$2.3 billion, which would be 10% lower than market consensus, though that would represent an increase of 6% from the previous quarter. The HKEX’s third quarter EBITDA is expected to plunged by 27% from a year earlier and EBITDA profit margin is forecast to drop by 6.2 percentage points from a year earlier to 72%, it said.
Separately, mainland Chinese investors had sold a net 1.93 million of HKEX’s shares in six straight trading days as of September 8.
