HKEX Investor Presentation - HKEX Group
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HKEX Investor Presentation Investor Relations November, 2020
Disclaimer The information contained in this document is for general informational purposes only and does not constitute an offer, solicitation, invitation or recommendation to subscribe for or purchase any securities, or other products or to provide any investment advice or service of any kind. This document is solely intended for distribution to and use by professional investors. This document is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Hong Kong Exchanges and Clearing Limited (“HKEX”) to any registration requirement within such jurisdiction or country. This document contains forward-looking statements which are based on the current expectations, estimates, projections, beliefs and assumptions of HKEX about the businesses and the markets in which it and its subsidiaries operate. These forward-looking statements are not guarantees of future performance and are subject to market risk, uncertainties and factors beyond the control of HKEX. Therefore, actual outcomes and returns may differ materially from the assumptions made and the statements contained in this document. Where this document refers to Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect (together, the “Stock Connect” programs), please note that currently, access to northbound trading is only available to intermediaries licensed or regulated in Hong Kong; southbound trading is only available to intermediaries licensed or regulated in Mainland China. Direct access to the Stock Connect is not available outside Hong Kong and Mainland China. Where this document refers to Bond Connect, please note that currently, access to northbound trading is only available to foreign investors that are able to trade onshore bonds on the China Foreign Exchange Trade System & National Interbank Funding Centre. Although the information contained in this document is obtained or compiled from sources believed to be reliable, HKEX does not guarantee the accuracy, validity, timeliness or completeness of the information or data for any particular purpose, and shall not accept any responsibility for, or be liable for, errors, omissions or other inaccuracies in the information or for the consequences thereof. The information set out in this document is provided on an “as is” and “as available” basis and may be amended or changed. It is not a substitute for professional advice which takes account of your specific circumstances and nothing in this document constitutes legal advice. HKEX shall not be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon any information provided in this document.
Agenda
01 | Key Performance and Growth Drivers
02 | Group Financial Update
03 | Strategic Plan 2019-2021
04 | China Connectivity
05 | Appendix
Financial supplement & Market indicatorsHKEX – Leading Vertically Integrated Exchange Group
HKEX GROUP
Financials
FY2019 YTD Q3 2020
Leading diversified exchange group in the Asian Time Zone REVENUE: REVENUE:
HK$16.3bn HK$14.1bn
HK’s only exchange group EBITDA: EBITDA:
HK$12.3bn HK$10.9bn
World’s leading IPO venue – ranked #1 in 7 of the past 11 years PAT: PAT:
HK$9.4bn HK$8.6bn
Pioneer in Mainland capital markets connectivity EPS: EPS:
HK$7.49 HK$6.8
London Metal Exchange – globally leading base metals exchange DPS: DPS:
HK$6.71 HK$3.71
(90% payout) (90% payout)
Primary & Secondary Markets Post Trade Market Access
Equity & Financial
Cash Equities Commodities
Derivatives Post Trade Technology
Market Data
22% 18% 9% 5%
38%
2019
Revenue
Share1
Note: Figures for FY2019 (unless otherwise stated)
1. Corporate items accounted for 8% of total revenue in 2019 and are not shown on this slide.
4YTD 2020 Key Highlights
Record nine-month revenue despite challenging macroeconomic backdrop with core business
revenue up by 21%YoY, reflecting higher trading and clearing fees driven by record headline ADT
Record nine-month Stock Connect revenue of HK$1,354mn (+79%YoY)
Net investment income fell HK$673mnYoY, primarily due to the fair value losses of collective
investment schemes previously announced at Q1
Profit attributable to shareholders at a nine-month record high of HK$8,580mn (+16%YoY)
Strong IPO Market – #3 by IPO funds raised (HK$215.9bn) and #4 globally by number of new
company listing (104) as of Sep
Major licensing agreement for MSCI Asia & EM indexes (38 new contracts launched in Q3), further
expanding HKEX product ecosystem
Ongoing market microstructure and technology capabilities enhancement
5Core Business Well-Positioned for Organic and Structural Growth
A Broad Product Ecosystem Attracting Diverse Mainland and International Investor Base
Securities ADT Derivatives ADV
CAGR Futures Options
(HK$ billion) (’000 contracts)
CAGR
+5.7%
Southbound Connect 1,204 Risk Management
125 +12.3% 1,068 1,156
106 107
88 87 869
Jumbo IPOs 768 762 Algo / Quant Investors
69 67
63
533 577
Global Investors After-hours Trading
3 3
2013
2014
2015
2016
2017
2018
2019
2013
2014
2015
2016
2017
2018
2019
2020
2020
YTD
YTD
B IPOs Driving ADT Growth C Transformational Growth from China’s Opening1
# of IPOs
Total IPO funds raised (US$ billion) Northbound ADT2 Southbound ADT2
Global fundraising rank New Economy Listing (RMB billion) (HK$ billion) Continuing Portfolio
#3 #2 #1 #1 #3 #1 #1 #3 Reforms Diversification
CAGR CAGR
120 218 250 • Biotech
174 183 +60.0% 90 +33.5% A-share Inclusion in
100 200 • WVR
80 138 126 120 Global Benchmarks
110 122 150 • Secondary Listings
23
60 13
30.0 33.9 25.2 36.6 40.1 100 10 11
40
21.8 32.1 Strong Pipeline of 6 5 20
42 SB Connect Limited by
16.4 50 Mainland and 10 3 4
20 Investor Eligibility Cap
0 3 0
International Listings 3 3
2016
2013
2014
2015
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2020
2020
2020
YTD
YTD
YTD
D Focus on Revenue Growth and Cost Discipline
Source: HKEX, Dealogic.
1. Shanghai-HK and Shenzhen-HK Stock Connect was launched in Nov 2014 and Dec 2016 respectively.
2. Buy + Sell ADT.
3. 2020 YTD as of Oct 2020.
6A Diverse International Investor Base Attracted to Broad Product Ecosystem
Algo / Quant Participation in Cash Market
Stock Due to…
Options Stock
Short Futures Relatively low • Presence of stamp duty
Selling (circa. 10-20% of ADT) • Minimal high frequency trading
• Single market structure
Stock
CBBCs Connect
Algo / Quant Participation in Derivatives Market
A-share
DWs Derivatives1 Driven by…
Stocks • No stamp duty
Relatively high
(circa. 40-60% of ADV) • Market maker participation
• Capital efficiency
OTC Bond
Connect
Recent initiatives and future focus
Index Asia & EM Market microstructure enhancements: leading to better price
Futures Index Futures2 discovery and trade efficiency
ETPs Currency
Futures Targeted marketing and client support: onboarding 10+ clients
each year
Incentives: driving increased volumes
Product cross-selling: creating arbitrage opportunities
1. HKEX signed a licence agreement with MSCI to introduce futures contracts on the MSCI China A Index, subject to regulatory approval and market conditions.
2. HKEX signed a licence agreement with MSCI to introduce 39 futures and options contracts in Hong Kong based on a suite of indexes in Asia and Emerging Markets, subject to regulatory
approval and market conditions (38 already launched since Sep 2020).
7A New MSCI Suite – Growing Product Ecosystem to Connect Global Trades
HKEX MSCI Product Suite1 Key Dynamics
NTR
Single country Regional
Expanding our product UNDERLYING
MSCI Australia MSCI Singapore MSCI AC Asia ex Japan2
MSCI China Free MSCI Singapore Free MSCI EM Asia licenced a suite of MSCI indexes in Asia and Emerging
MSCI Hong Kong MSCI Taiwan MSCI EM Asia ex China Markets to introduce 39 futures and options contracts (38
MSCI India MSCI Taiwan 25/50 MSCI EM Asia ex Korea already launched as of Sep 2020)
MSCI Indonesia MSCI Thailand MSCI EM EMEA
MSCI Japan MSCI Vietnam MSCI EM ex China
MSCI Japan (JPY) MSCI EM ex Korea
MSCI Malaysia MSCI EM LatAm
MSCI New Zealand MSCI Emerging Markets
MSCI Philippines MSCI Pacific Broadening and deepening LIQUIDITY
MSCI Pacific ex Japan Allow investors to Trade Asia, in Asia
Price Return Complement existing HSI and HSCEI index futures
Single country Regional
MSCI China Free MSCI Taiwan 25/50 MSCI Emerging Markets
MSCI India MSCI Thailand
MSCI Indonesia MSCI Singapore Free
MSCI Japan (JPY) (SGD) Enhancing our COMPETITIVENESS
MSCI Malaysia MSCI Taiwan Better capital efficiency
MSCI Philippines MSCI Vietnam
Creating a competitive one-stop shop for China and Asian
Options exposures
MSCI Taiwan
Reinforces Hong Kong’s role as the leading global market in the Asian Time Zone, with the broadest suite of MSCI
derivatives products
1. All contracts denominated in USD unless otherwise specified
2. Started trading in HKEX since 2018
8A New MSCI Suite – Growing ADV and Open Interest since Launch
ADV (No. of Contracts)
8,810
Others
8,000 Intense competition from
MSCI TW NTR
MSCI TW 25/50 SGX (FTSE Taiwan Capped
6,000
5,071 MSCI CN Free NTR products) while still recording
4,000 MSCI EM Asia meaningful ADV since
MSCI TW launch
2,000
Encouraging capture of OI
251 478
0 against global landscape
Jul-20 Aug-20 Sep-20 Oct-20 (e.g. migration of large client
OI (No. of Contracts)
position from Eurex in Oct)
100,000 94,847
Others Expect to see continuous
80,000 MSCI TH NTR migration with upcoming rolls
MSCI CN Free NTR in Dec
60,000
44,066 MSCI TW NTR
40,000 MSCI EM Asia
MSCI TW
20,000
330 3,967
0
Jul-20 Aug-20 Sep-20 Oct-20
We expect trading momentum to grow gradually over time as investors migrate OI to HKEX
9A ETP – A Growing Contributor along with Market Structure Enhancements
ADT 1
$6.6B
2020
$5.0B ADT CONTINUOUS QUOTING AND
NEW SPREAD TABLE (JUN)
2019
DESIGNATED SPECIALISTS
$4.5B ADT
A-SHARE L&I PRODUCTS (JUL)
2018
INTRODUCE ICSD SETTLEMENT
MODEL
MARKET MAKER
ACTIVE ETFS
STAMP DUTY EXEMPTION (AUG)
-2X INVERSE PRODUCTS
OFC HONG KONG/MAINLAND ETF
MARKET MAKER BUY-IN
STRUCTURE CROSS-LISTING (OCT)
EXEMPTION
GREATER DEEPENED LOWER IMPROVED
PRODUCT DIVERSITY LIQUIDITY POOL TRADING COSTS MARKET QUALITY
Our aspiration is to become Asia’s ETP Marketplace
1. YTD Data from 1 Jan 2020 to 30 Oct 2020
10B Strongly Performing IPO Market boosted by New Economy Issuers and
Secondary Listings
2020 Jan - Sep Fundraising Summary
…raising
HK$215.9bn
IPO Funds Raised
32 New Economy
(#3 globally)
& Biotech Companies Listed… HK$161.0bn
+61% YoY +376% YoY
IPO Funds Raised by Segments
No. of IPO
– Total 174 218 183 104
– New Economy1 World’s second-largest fund raising hub for biotech
– Biotech2 14 27 38 25
companies
0 5 9 7
Dialogues with the Biotech Community 2020 webinar
IPO Funds Raised series with PhiRDA - attracted 292,000+ views
(HK$ bn)
314.2 HKEX Biotech Summit 2020 (Virtual) – received
288.0
300 extensive interest from scientists, biotech entrepreneurs,
investors, technology experts and policymakers
215.9
Ongoing listing reforms
200
128.5 Shortening of IPO settlement cycle
100 Enhancing listing regime for overseas issuers
Enhancing the bookbuilding and price discovery aspects
of IPOs (cornerstone investors, pricing flexibility,
0
2017 2018 2019 2020 YTD clawback mechanism)
Others Biotech New Economy
Source: HKEX, as of September 2020.
1. Include Non-18A Biotech companies
2. Only include Chapter 18A Biotech companies
11B Jumbo IPOs Contributing to Increased Trading Activity
21 Jumbo IPOs > US$1bn (HK$7.8bn) since Jan 2018 Rising contribution to volumes from Jumbo IPOs
IPO size
Rank Company name IPO date Cash Market ADT (HK$ bn) contributed
(HK$bn)
by the Jumbo IPOs and related Structured Products ADT
1 Alibaba Group - SW 26/11/2019 101.20
2 China Tower - H 08/08/2018 58.80 % of respective ADT
3 Budweiser Brewing APAC 30/09/2019 45.08 14.5%
% of single stock option ADV
4 Xiaomi Corporation - W 09/07/2018 42.61
5 JD.COM - SW 18/06/2020 34.56
20.5%
6 Meituan Dianping - W 20/09/2018 33.14
7 Netease - S 11/06/2020 24.26
8 Yum China - S 10/09/2020 17.27 7.3%
9 China Bohai Bank - H 16/07/2020 15.90
25.6
10 ESR Cayman Ltd. 01/11/2019 14.06
11 Tigermed - H 07/08/2020 12.31 10.5%
12 ZTO Express - SW 29/09/2020 1.3%
11.28
13 Shimao Services 30/10/2020 9.76
14 Nongfu Spring - H 08/09/2020 9.60
15 Shenwan Hongyuan - H 26/04/2019 9.09 3.0%
16 Hansoh Pharmaceutical Group 14/06/2019 9.04 9.2
17 Topsports International 10/10/2019 9.01
Ping An Healthcare and
18
Technology
04/05/2018 8.77 3.3
19 Jiangxi Bank - H 26/06/2018 8.60
20 WuXi AppTec - H 13/12/2018 8.28
2018 2019 2020 YTD
21 Smoore 10/07/2020 8.19
In 2020, 21% of cash ADT and 15% of stock option ADV is contributed by the top 21 IPOs over the last ~3 years
Source: HKEX, as of Oct 2020.
1. Ranked by IPO size.
12B Continuous Trading Volume Migration and ADR conversion from
Secondary Listings
HKEX Trading Share – 2020 YTD ADR conversion to HK shares
% of Alibaba NetEase JD.com
Alibaba NetEase JD.com
Trading
+448%
14.8%
+88%
SEHK 19.1% 34.1% 21.8%
+12% 9.6%
5.8% 6.5%
5.1%
FINRA ADF 26.6% 15.1% 27.3% 2.7%
26/11/19 Sep-20 11/06/20 Sep-20 18/06/20 Sep-20
(IPO) (IPO) (IPO)
NYSE 16.5% 2.7% 1.7%
Number of Hong Kong (freely traded) shares as % of total issued shares globally
Strong Boost to HK Markets Trading
NASDAQ 12.2% 27.2% 28.1%
Alibaba,
ADT/ADV in HKEX Market Total %
NetEase & JD
NYSE Arca 7.3% 7.3% 7.9%
Equities+ DWs+CBBCs
(HK$bn) 10.2 125.7 8.1
Other US
18.3% 13.5% 13.2% SSO
Exchanges (Volume, ‘000) 22.7 522.8 4.4
Alibaba, NetEase and JD.com secondary listings have contributed ~8% ADT YTD 2020 to Hong Kong market’s liquidity,
with a clear trend of ADR conversion to HK shares
Source: HKEX, FactSet, as of 30 September 2020
Note: Alibaba is listed on NYSE, while NetEase and JD.com are listed on NASDAQ
1. Based on total CCASS balance deducting the balance of main custodian bank as reference
13C Transformational Growth from China’s Opening
Stock Connect1 Bond Connect
Northbound Southbound Total Foreign Participation in CIBM 2
(RMB billion) (HK$ billion) (RMB billion) Investors
Foreign Holdings in Chinese Bonds
Foreign
Onboarded
Portfolio Value Portfolio Value
(US$ bn)
Ownership (%)
500 3.0%
3.5% >2,200
Bond Connect US$428bn
CAGR 3.0%
CAGR launch
1,950 400
2.5%
+84.0% +77.3%
1,429 1,696 300 2.0%
1,138
927
789 1.5% YTD ADT
668 200
531 1.0%
364
RMB19.5bn
100
125 186 115
0.5%
3
0 0.0%
2020
2019
3 3
2015
2016
2017
2018
2015
2016
2017
2018
2019
2020
Continuing portfolio diversification by Mainland and Inclusion of Mainland bonds into global fixed income
international investors indices
Inclusion of A shares into major global benchmarks Easier access to the Mainland bond market via more
trading platforms
Increasing selection of new economy companies in
Southbound Stock Connect Increasing use of RMB globally and need to reinvest
into RMB assets
Benefiting from the increased capital flow into and out of Mainland China,
in particular inbound flows driven by international index inclusions
Source: HKEX, Bond Connect, ChinaBond, SCH;
1. Shanghai-HK and Shenzhen-HK Stock Connect was launched in Nov 2014 and Dec 2016 respectively.
2. Foreign participation in CIBM was first allowed in 2010 when the PBOC rolled out a Pilot Scheme to allow foreign financial institutions to invest in CIBM.
3. Data as of Oct 2020 (unless otherwise specified).
14D Focus on Revenue Growth and Cost Discipline
2013-2016 2016-2019
ADT re-rating
Stock Connect – Shanghai
Stock Connect – Shanghai + Shenzhen
After-hours trading
Continuing growth in derivatives
LME fee commercialisation
Listing reforms and new economy issuers
Launch of LME Clear
Revamped investment income approach
Revenue (HK$ million) EBITDA (HK$ million)
EBITDA
68% 70% 75% 69% 73% 74% 75%
Margin
CAGR +13.6%
+8.4%
16,311 CAGR +17.0%
15,867
13,375 13,180 +8.8%
11,116 11,757 12,263
9,849 10,085
8,723 9,614
6,891 7,661
5,946
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Reaping rewards from the structural growth initiatives that have already been implemented
15D Focus on Revenue Growth and Cost Discipline
2013-2016 2016-2019
Reaping rewards of past investments and
Investment in growth initiatives to capture benefiting from operating leverage
China opportunities
Increased cost discipline
Upgrading core infrastructure to strengthen
technological foundation Investment in automation and operational
efficiency
Operating Expenses (HK$ million) Profit Attributable to Shareholders (HK$ million)
Net Profit
68% 70% 75% 69% 73% 74% 75%
Margin
CAGR +5.4%
+7.6%
CAGR +17.6%
4,110 4,048
3,455 3,566 +8.2%
3,290
2,777 2,958 9,312 9,391
7,956 7,404
5,165 5,769
4,552
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Increased operating leverage from revenue growth, delivered by structural drivers combined with opex discipline
1. If the impact of HKFRS 16 were excluded, 2019 Operating Expense would be HK$4,362 million and the 2016-2019 CAGR would be 8.1%.
16Continued focus on Organisational Excellence and Corporate Sustainability
Progressing our financial markets and communities for the benefit of all
TALENT RISK ENGAGEMENT REPUTATION CULTURE
OUR MARKETS OUR PEOPLE OUR OPERATIONS
Ongoing promotion of ESG standards with Official launch of HKEX Foundation with the Ongoing enhancement of employees’
the updated ESG Guide, new e-Learning flagship $20m Charity Partnership awareness of our legal and compliance
series and updated ESG guidance letter and Programme and ongoing donations and e- obligations
active involvement in global ESG volunteering activities for the community
standardisation engagement Engaged the markets in adopting
Supporting employees’ wellbeing across sustainability practices in the business
Promoting sustainable and green finance the Group, especially during the time of operations, e.g. e-IPO regime, LME
with the development of STAGE and the COVID-19 passport
LME’s sustainability plan
Championing workplace diversity through Implementation of HKEX Future Workplace
Cultivating the development of biotech internal training, advocacy and partnership and digitalisation of internal workflows to
ecosystem in Hong Kong with the flagship with professional groups, universities and improve efficiency and reduce paper
Biotech Summit NGOs consumption
Ongoing enhancements to HKEX’s website
Recognised as a sustainability leader with
the constituent status in various
sustainability indexes, e.g. DJSI, Hang Seng
Corporate Sustainability Index series
17Agenda
01 | Key Performance and Growth Drivers
02 | Group Financial Update
03 | Strategic Plan 2019-2021
04 | China Connectivity
05 | Appendix
Financial supplement & Market indicatorsKey Financial Highlights
Record revenue and profit
Record core business revenue; market conditions impacted investment income
(HK$)
Total revenue & other income Core business revenue Net investment income
+12% +21% -31%
$12.6bn $14.1bn $10.4bn $12.6bn $2.2bn $1.5bn
YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020
EBITDA PAT Basic earnings per share
+13% +16% +15%
$9.7bn $10.9bn
YTD Q3 2019 YTD Q3 2020
$7.4bn $8.6bn $5.92 $6.80
Margin YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020
77% 77%
1. % is computed based on amounts reported in financial statements.
2. May not add up due to roundings
19YTD Q3 2020: Record Revenue and Profit
Revenue and Operating Profit attributable to HKEX
EBITDA Basic earnings per share
other income expenses (1) shareholders (2)
(HK$ mn) (HK$)
Core business+NII Core business+NII Core business+NII Core business+NII
+ 12% + 11% + 13% + 16% + 15%
Core business Core business Core business Core business
+ 21% + 25% + 35% + 34%
ADT
77% Margin 77%
HK$90.5bn +39% HK$125.7bn
14,091
12,565
NII 1,483
NII 2,156
10,883
9,663
NII 1,483 8,580
NII 2,156 7,412
NII 1,483 6.80
Core business 5.92
NII 2,156 NII 1.18
Core business 12,608
10,409 Core business NII 1.72
2,902 3,208 Core business 9,400 Core business
7,507 Core business 7,097 Core business
5,256 Core business 5.62
4.20
YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020
Trading & clearing fees from Staff costs from HC mainly EBITDA margin stable PAT % more than EBITDA EPS % less than PAT due to
record headline ADT and record from BayConnect acquisition & due to LSEG costs of shares issued for scrip
Stock Connect revenue annual payroll adj HK$130mn in 2019 dividends
Listing fees from DWs and IT costs from new IT systems
record newly listed CBBCs and network upgrade
Net investment income (NII) Professional fees from strategic
due to HK$572mn gains from projects and business initiatives
external portfolio (2020: Foundation donation(3) and license
HK$71mn; 2019: HK$643mn) fees for MSCI contracts
and interest income
1. Excludes depreciation and amortisation, finance costs, share of profits/(losses) of joint ventures, and costs arising from the proposed combination with London Stock Exchange Group plc (LSEG)
2. For the purpose of this presentation, tax impact of NII is not considered when calculating the PAT attributable to NII.
3. From 2H 2020 onwards, the donation income from the Stock Code Balloting Charity Scheme and the payment to the Hong Kong Community Chest were channelled through HKEX Foundation.
Together with the first flagship Charity Partnership Programme and other charitable activities, HKEX Foundation charitable expenses amounted to HK$57mn in YTD Q3 2020.
20Q3 2020: Quarterly Record High due to Record Stock Connect Revenue
and Higher Headline ADT
Profit attributable to
Revenue and other income Operating expenses (1) EBITDA
HKEX shareholders (2)
(HK$ mn)
Core business+NII + 8% Core business+NII Core business+NII
+ 11% + 12% + 13%
Core business Core business Core business
+ 20% +24% + 30%
ADT
78% Margin 79%
HK$114.0bn +24% HK$141.1bn
5,309
4,773
NII 645
4,177
NII 885 3,722
NII 645 3,347
2,971
NII 885 NII 645
Core business NII 885
Core business 4,664 Core business
3,888 1,132 Core business
1,051 3,532 Core business
2,837 Core business 2,702
2,086
Q2 2020 Q3 2020 Q2 2020 Q3 2020 Q2 2020 Q3 2020 Q2 2020 Q3 2020
Trading and clearing fees from ADT Staff costs and recruitment EBITDA margin 1% PAT % more than EBITDA due to
and record Northbound ADT (RMB117.0bn expenses lower in D&A
in Q3)
License fees for MSCI contracts from Q3
Partly offset by: 2020
NII due to HK$174mn gains from
external portfolio (Q3: HK$209mn; Q2:
HK$383mn) and interest income
1. Excludes depreciation and amortisation, finance costs, and share of profits/(losses) of joint ventures
2. For the purpose of this presentation, tax impact of NII is not considered when calculating the PAT attributable to NII.
21Higher Revenue across All Business Segments, Offsetting Lower
Net Investment Income
Segmental revenue
(HK$ mn)
925 86 14,091
887 163 61
12,565
(596)
+32% +7% +6% +19% +15% -60% +12%
YTD Q3
YTD Q3 2019
2019 Cash Equity and Financial Commodities Post Trade Technology Corporate Items YTD Q3 2020
Derivatives
Trading fees & tariffs Trading fees & tariffs Trading fees Clearing fees Network fees NII of Corporate
% from record ADT from DWs, CBBCs & from LME fee from ADT & due to usage Funds due to
of equity products warrants from increase SIs, and record of the Orion Central from external
Change and record Stock trading fees of newly Stock Connect Gateway and China portfolio
year-on-year Connect trading listed DWs & CBBCs, clearing revenue Connect Central
revenue and no. of trades Gateway by EPs
Accommodation
Trading fees from income due to Hosting services
futures and options JPY & EUR fees due to
from proportion collateral by HKCC subscriptions
of higher fee contracts CPs and USD
traded investment return of
LME Clear fell below
Listing fees due to benchmark
newly listed DWs
and record newly
listed CBBCs
1. Headline ADT up 39% (YTD Q3 2020: HK$125.7bn; YTD Q3 2019: HK$90.5bn); ADT of equity products up 51% (YTD Q3 2020: HK$106.8bn; YTD Q3 2019: HK$70.8bn); ADT of DWs, CBBCs
and warrants included under equity and financial derivatives down 4% (YTD Q3 2020: HK$18.9bn; YTD Q3 2019: HK$19.7bn)
22Higher EBITDA in All Business Segments
Equity & Financial Group Total
Cash Commodities Post Trade Technology
Derivatives (incl. Corp. Items)
(HK$ mn)
+ 39% + 4% + 5% + 21% + 12% + 13%
% EBITDA Margin
77% 77%
Share of Group EBITDA
% (before Corporate Items) 10,883
9,663
84% 88% 82% 80% 54% 53% 87% 89% 70% 68%
5,114
4,236
100% 100%
3,201
2,306 565 592
1,930 2,012 406 453
25% 28% 20% 18% 6% 5% 45% 45% 4% 4%
YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020 YTD Q3 2019 YTD Q3 2020
Trading fees & tariffs from record Trading fees & tariffs from DWs, Trading fees from LME fee Clearing fees from ADT & SI, Network fees due to usage of EBITDA margin stable
ADT of equity products and record CBBCs & warrants from increase and record Stock Connect clearing the Orion Central Gateway and
Stock Connect trading revenue trading fees of newly listed DWs Opex due to IT maintenance revenue China Connect Central Gateway by
Opex due to lower allocated & CBBCs, and no. of trades expenses & professional fees for Other revenue from EPs
costs of Listing Division from Trading fees from futures and strategic projects and operational accommodation income Hosting services fees due to
proportion of listing fees from options from proportion of resilience Opex due to staff costs from subscriptions
equities higher fee contracts traded annual payroll increment, and Opex due to BayConnect
Listing fees due to newly listed bank charges from e-IPO opex (1)
DWs and record newly listed applications
CBBCs
Opex due to higher allocated
costs of Listing division from
listing fees from DWs and
CBBCs, and MSCI license fees
since Q3 2020
1. The acquisition of BayConnect was completed in June 2019 and its opex is included under Technology Segment.
23Lower Net Investment Income in a Low Interest Rate Environment
YTD Q3 2020: HK$1,483mn (YTD Q3 2019: HK$2,156mn)
External portfolio - lower gains reflecting market valuations Average fund size
Internal funds - lower income from reduced interest rates and (HK$ bn)
higher margin rebates to participants, partly offset by higher fund
201.8
sizes
170.4 30.2 Corporate Funds
27.8
Net investment income by funds Margin Funds
155.3
(HK$ mn) 129.6 Clearing House
Funds
Corporate Funds Corporate Funds Margin Clearing 13.0 16.3
(External Portfolio) (Internal) Funds House Funds
YTD Q3 2019 YTD Q3 2020
1,099
1,049
Net investment income by category of investments
(HK$ mn)
643 Cash & Collective
Debt
bank investment FX
securities
deposits schemes
338 1,424 1,402
293
643
71 76 70
77 47 71
12
(37)
YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
24Agenda
01 | Key Performance and Growth Drivers
02 | Group Financial Update
03 | Strategic Plan 2019-2021
04 | China Connectivity
05 | Appendix
Financial supplement & Market indicatorsOur 2019-2021 Strategic Vision
The Global Markets Leader in the Asian Time Zone –
Connecting China, Connecting the World
China Global
Liquidity Liquidity
China Global
Markets Markets
China Global
Underlying Underlying
China Anchored Technology Empowered Globally Connected
Facilitating China’s Leveraging new technology Bringing global liquidity
internationalisation and for modernisation and to China and Asia Pacific
investment diversification growth underlying
26Strategic Plan 2019-2021
CHINA ANCHORED
Key Objectives Achievements to Date
MSCI China A Futures: signed agreement with MSCI,
pending regulatory approval
Stock Connect: inclusion of Xiaomi and Meituan Dianping
1 Expand Northbound capital inflows in Southbound; announced inclusion arrangements of
A+H companies for STAR companies
Corporate WVR: Consultation conclusions published in
Oct 2020, introducing new grandfathering arrangements
2 Expand Southbound capital to enable qualifying issuers with Corporate WVR to seek
allocation secondary listings in Hong Kong
Southbound investor ID: launched in Jan 2020 to facilitate
Expand post-trade orderly operation and regulation of Stock Connect
3
infrastructure
Northbound Master SPSA: launched in Jul 2020 to
facilitate more efficient pre-trade checking of Northbound
sell orders and average pricing execution at the fund
manager level
Bond Connect: addition of Bloomberg as second access
platform; >2,200 investors onboarded; market
infrastructure enhancements (e.g. extension of trading
hours, introduction of ePrime for bond issuance, etc)
QME: introduced 5 products within first year of launch;
Launched natural gas products in Aug 2020
27Strategic Plan 2019-2021
GLOBALLY CONNECTED
Key Objectives Achievements to Date
Cash Market: expansion of closing auction session; launched
Volatility Control Mechanism (VCM); enhancements to Pre-
opening Session (POS) effective on 19 Oct 2020
Derivatives Market: after-hours trading extended to 3am; MSCI
Enhance our product ecosystem Asia & EM Index futures & options; enhanced block trade facilities
1
across asset classes and Capital-based Position Limit; more new stock options
ETP market structure: cross-listing link with Euroclear;
buy-in exemption; new spread table and continuous
Improve our market quoting market making; waiver on stamp duty on stock
2
microstructure transfers for ETP market makers
ETP product suite: First active equity ETF, -2x Inverse ETP, iron
Expand our international footprint ore futures ETF, commodity-based L&I Product, A-share L&I
3
further Product, HK/Mainland ETF Cross-Listing
Derivatives & structured products: Inline Warrants; Weekly
Index options; Indian Rupee Currency Futures
Commodities: 6 gold indexes and USD London Metal Mini
Futures for 6 base metals in HK; 7 new cash-settled metals
futures on the LME; USD and CNH Silver Futures launched
in Jun 2020; LME launched new rules to optimise
warehousing network
IPO regime: ongoing initiative to shorten IPO settlement
cycle; Alibaba paperless IPO (T+4 settlement)
International listings: Budweiser APAC and ESR Cayman
28Strategic Plan 2019-2021
TECHNOLOGY EMPOWERED
Key Objectives Achievements to Date
Core enhancements: Derivatives market platform upgrade;
new Stock Connect trading system (OTP-CSC)
1 Modernise core systems Client Connect: phase 1 rollout; Initiating phase 2 for
further digitisation on multiple processes and forms
Operational efficiency: continue to progress on delivery of
2 Leverage new technology robotic process automation across divisions; shortened
the listing cycle of structured products; roll-out of AI and
Robotic systems for Listing applications
3 Expand our horizons Technology resources: 51% acquisition of BayConnect
(Ronghui Tongjin); launched ‘Aiden’, HKEX’s first virtual
assistant
Virtual bank: Fusion Bank received HKMA licence and soft-
launched in Oct 2020
Data strategy: minority investment in Huakong TsingJiao
292019-2021 Strategy – FICC Themes
FIXED INCOME AND CURRENCY COMMODITIES
Facilitate CNY access Expand product suite
Enhance Bond Connect Pricing evolution
Expand suite of offshore rates / FX
Mainland China warehouses
derivatives on onshore underlying
Build post-trade infrastructure
Commodity Connect
(custody, settlement, collateral management, FX)
30Key Components of Our FIC Strategy
Bond Connect enhancements
Expand Existing Platform Listed bonds and derivatives
Southbound Bond Connect
CNY accessibility – repository, tracking and monitoring
Capture CNY Opportunities IRS and repo + Derivatives Connect
CNY trading platform
Custody, settlement and collateral management
Invest in Post-Trade Infrastructure Trade repository and monitoring
International linkages
31LME Group Integration Process Complete…
Commercialisation
Post-acquisition Strategic pathway, future
of the platform
integration and platform development and
with LP and new
LME Clear launch revised fee structure
trader programme
22 Sep 2014
ADV (‘000 lots)
6 Dec 2012 LME Clear
1,000 HKEX Launch
acquisition
800
730
700 697
676 670
634 619 624 623
584
600
475
400
200
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD
Source: LME data as of Oct 2020
1. Excluding Admin Trades, 2020 YTD: 582,732 lots.
32…and LME Strategic Development on Track
Market leadership
• Promoting the highest standards of fair and orderly trading on the LME’s market
• Delivery of off-warrant stock reporting to provide better industry-wide metals stock transparency
• Opening a market discussion as to acceptable practices for commodities trading going forwards
Strategic Pathway Continued innovation
• Significant investment in new trading
• Continuing the success of the Strategic
platform
Pathway
• Supporting industry initiatives to enhance
• New contracts continue to build
security of off-warrant metal storage
liquidity, especially across ferrous suite
• Investigating solutions to enable the spot
• 2020 prioritisation of electronic options
trading and sourcing of specific metal types
market to simplify and standardise
• Insourcing warrant depository to streamline
areas of its market structure
the warrant lodgement and withdrawal
process, and provide significant operational
efficiencies
Sustainability focus
• Continued embedding of responsible sourcing requirements into the LME brand lists, ensuring that LME
brand listing is a clear indicator of good ethical standing
• Launch of 2020 sustainability strategy proposals to reflect market interest in broader sustainability story
with a focus on low carbon aluminium
33Market Microstructure Enhancements at HKEX
We aim to build a quality market and a sustainable ecosystem of policies, participants and products
Areas of Focus Key Achievements so far Since 2019
• Better client onboarding
Improve Ease
• Participants system testing enhancements
of Access • Northbound throttle expansion (Stock Connect)
• Expand Closing Auction Session (Cash)
Reduce Frictional • After-hours trading extension to 3am (Derivatives)
Trading Costs • New spread table, Market Making enhancements and stamp duty exemption on ETP
market
• Better cash interest rebates to participants
Improve
• Flexibility in Clearing Participants (CP) setup in HK and Stock Connect markets
Capital Efficiency • Flexibility for Non-CPs in clearing arrangements
Enhance Risk
• Revamp Pre-Opening Session and Volatility Control Mechanism (Cash)
Management
• Self-Match Prevention (Derivatives)
& Market Integrity
Selected Initiatives in the Pipeline
• Holiday trading and trading hour enhancements for MSCI products
• Shorten IPO settlement cycle
• Pre-Trade Risk Management Enhancements
• Increase Position Limit for certain products
We have achieved 25+ enhancements in the last 2 years and will continue to ensure
competitiveness and efficiency of our markets
34Agenda
01 | Key Performance and Growth Drivers
02 | Group Financial Update
03 | Strategic Plan 2019-2021
04 | China Connectivity
05 | Appendix
Financial supplement & Market indicatorsThe Penetration Level of Equity Market through Stock Connect
% of domestic market included in Stock Connect Stock Connect Coverage
(% of all Mainland & HK listed companies)
MUTUAL MARKET
By SSE 78%
Market 73% 76%
of total market cap
Cap SZSE 78%
SSE 64%
By
89% 69%
Turnover of total turnover
SZSE 69%
SSE 33% 579
By 28%
488 19% of total number of
Number
SZSE 35% 802 companies
Stock Connect covers the majority of the market by market cap and turnover
Source: Wind, HKEX
1. Data as of Sep 2020.
36Stock Connect – Trading Trends
Stock Connect generated record revenue of HK$1,354mn in YTD Q3 2020, 79% higher than YTD Q3 2019
(Full Year 2019: HK$1,009mn)
Stock Connect Average Daily Trading Volume (HK$ bn)
Shenzhen Southbound Shenzhen Northbound (1) Total average daily trading volume
Shanghai Southbound Shanghai Northbound (1) Percentage of Southbound turnover of Hong Kong Market
NB record of SB record
RMB191.2bn on of HK$60.2bn
7 Jul 2020 on 6 Jul 2020
10.9%
9.1% 10.4%
9.0% 9.1%
9.0% 10.00%
8.7% 8.0% 202.1 8.4%
7.9%
200 7.3%
6.8% 6.4% 17.2
6.1% 5.8%
5.3% 5.7% 6.1%
4.8% 5.4% 4.8% 5.6% 18.9
3.7% 3.9% 151.8 5.00%
150 2.2% 2.3% 12.4
1.7% 132.5
1.4% 1.3%
0.8% 12.3 121.7
114.8 118.6 11.9
106.3 93.7 9.9
8.3 10.2 12.5 0.00%
91.9 10.6
100 84.7 12.3 15.6 89.2 9.7
8.6 10.5 72.7
6.8 8.0
67.5 10.1 11.2 63.3
57.4 56.8 9.6 59.2
3.8 52.8 53.9 52.9
6.8 51.3
43.6 37.8 4.3 4.3 -5.00%
50 34.4 7.5 3.6 6.9 37.0 40.9 42.2
30.6 6.5 32.0 26.6 6.3
21.6 5.0 3.0 21.1 21.4 23.9 72.3
19.2 17.9 13.2 8.0 3.7 5.3 54.4
10.7 8.6 10.9 13.5 6.2 10.8 41.9 44.8
7.9 6.9 6.4 6.0 10.1 11.0 9.7 30.3 31.3 40.3 39.8
30.2 29.8 34.9
15.3 24.6 21.4 21.6
13.8 13.8 12.4
0 -10.00%
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20
Stock Connect Northbound and Southbound Trading ADT reached RMB90.0bn and HK$23.2bn respectively in YTD Q3 2020
Stock Connect revenue continued to set record highs, reaching 12% of the Group’s total revenue and other income
in Q3 2020 (YTD Q3 2020: 10%; YTD Q3 2019: 6%)
Source: HKEX, SSE and SZSE as of 30 Oct 2020
1. Northbound (NB) trading is conducted in RMB; The NB figures in the chart are converted to HKD based on the month-end exchange rate.
2. Does not add up due to roundings
37Stock Connect (Northbound)
Average Daily Turnover Portfolio Value
RMB billion RMB billion
124.3 1,952 1,950
MSCI
rebalancing 1,892 2020
days
1,687
2019
1,518
90.3 1,437 1,439
1,429
84.3
1,450
77.3
1,298 1,160
1,264
1,054 1,221
1,050
1,094
1,033 1,043
932
2018
951
41.7 785 2017
698 719
34.7 686 662 680 679 668
31.7 621
601 576 592
566
502 530
491
20.4 437
404
347 366
9.6 270 301
233 253
4.7 202
2016 2017 2018 2019 2020 31 May 31 Aug 28 May 27 Aug 26 Nov Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
YTD 2018 2018 2019 2019 2019
Source: HKEX
1. Data as of 30 Oct 2020.
38Index Futures on China Underlying
ADV (’000 contracts)
Hang Seng Index Futures (50)3 HSCEI Futures (50)3
WEIGHTING COMPOSITION1 NOTIONAL VALUE1 NOTIONAL VALUE1
54% 46% US$154k US$62k
234
MAINLAND CHINA OTHER 209
175 152 150
135 134 139
131 117
127
86 89
85 94 83 80 86 65
69 50 61
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YTD* YTD*
Trading Fee: HK$10.00/contract, 0.0007% to notional value Trading Fee: HK$3.50/contract, 0.0006% to notional value
FTSE China A50 Index Futures (SGX) (50)3 CSI 300 Index Futures (CFFEX) (300)3
NOTIONAL VALUE1 NOTIONAL VALUE1
US$16k US$210k
391 396 1,136
369
339
884
270 260 812
159 432
84 251 207
39 96 123
2 12 17 17 31
2
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YTD* YTD*
Trading Fee: US$0.80/contract, 0.0056% to notional value Trading Fee: RMB27.78/contract, 0.0023% to notional value
Source: HKEX, SGX, CFFEX, FIA
1. As of Oct 2020.
2. CSI 300 Index Futures was launched in Apr 2010.
3. Numbers in brackets represent the number of constituents within the underlying index.
* 2020 YTD as of Oct 2020.
39Tapping into China’s Vast Bond Market
China’s Bond International
Market Investors
Key Policy Drivers
Outstanding,
US$43tn US$ tn Relative to GDP
• Risk migration from banking sector to bond market
50 192%
• Greater credit differentiation amid ongoing market
reforms
25 99% 244%
222% 173%
• Funding needs for economic transition and
infrastructure projects – e.g. Belt & Road; Panda
0
US China Japan UK FR
bonds
• Enhanced bond issuance and disclosure standards
US$14tn Growing International Demand
• Yield differential against developed markets
US$8tn
• Inclusion in emerging market bond indexes
• Geographical and asset class diversification
Bank Assets Equities Bonds
• Growing convertibility of RMB / SDR inclusion
• More efficient access – Bond Connect
Source: CBIRC (Aug 2020), World Bank, PBOC, BIS, IMF
40Bond Connect Has Significantly Grown Foreign Participation in China’s Bond
Market
Bond Connect Oct 2020 YTD ADT: RMB 19.5bn
1
Foreign Participation in the CIBM Growth Drivers
Foreign Holdings in Chinese Bonds Foreign Ownership (%)
(US$ billion) Inclusion of Mainland bonds in global fixed income
indexes (BBGA, GBI-EM, WGBI)2
RQFII QFII Long-only
500 investment investment investment 3.5% Greater adoption of RMB globally and
Bond 3.0% need to reinvest in RMB assets
Pilot scheme
Connect US$428bn
to access 3.0%
launch
400 CIBM
Improving access to the Mainland bond market
2.5%
300 Foreign Ownership %
2.0% 68%
64%
Achievable
1.5%
200 46% target
41% 39% 38% Average: 38.5% 15%
1.0%
29%
100
0.5% 13%
8%
~3%
0 0.0%
(1)
DE FR AU UK IT CA US RU JP China
Foreign participation in the CIBM increased by 255% since launch of Bond Connect in July 2017(1)
Number of Bond Connect participants has grown to 2,244 as of Oct 2020
Source: ChinaBond + SCH, Bloomberg, BIS
1. Foreign participation in the CIBM data as of Oct 2020
2. BBGA is Bloomberg Barclay Global-Aggregate, GBI-EM is J.P. Morgan Government Bond Index-Emerging Markets series, WGBI is FTSE World Government Bond Index
41Agenda
01 | Key Performance and Growth Drivers
02 | Group Financial Update
03 | Strategic Plan 2019-2021
04 | China Connectivity
05 | Appendix
Financial supplement & Market indicatorsFinancial Highlights – Income Statement
% of Revenue & % of Revenue &
(HK$ mn, unless stated otherwise) YTD Q3 2020 YTD Q3 2019 YoY Change
Other Income Other Income
Results
Revenue and other income 14,091 100% 12,565 100% 12%
Operating expenses (3,208) (23%) (2,902) (23%) 11%
EBITDA 10,883 77% 9,663 77% 13%
Depreciation and amortisation (827) (6%) (766) (6%) 8%
Operating profit 10,056 71% 8,897 71% 13%
Costs relating to proposed combination with LSEG - 0% (130) (1%) (100%)
Finance costs and share of profits less losses of joint
(85) (1%) (112) (1%) (24%)
ventures
Profit before taxation 9,971 71% 8,655 69% 15%
Taxation (1,398) (10%) (1,247) (10%) 12%
Loss attributable to non-controlling interests 7 0% 4 0% 75%
Profit attributable to HKEX shareholders 8,580 61% 7,412 59% 16%
Capex 845 622 36%
Basic earnings per share HK$6.80 HK$5.92 15%
Headline ADT on the Stock Exchange HK$125.7 bn HK$90.5 bn 39%
1. % does not add up due to roundings.
43Performance by Operating Segment
Equity &
Corporate Group Group
HK$ mn Cash Financial Commodities Post Trade Technology
Items YTD Q3 2020 YTD Q3 2019
Derivatives
Revenue and other income 3,637 2,511 1,107 5,771 662 403 14,091 12,565
% of Group Total 26% 18% 8% 41% 4% 3% 100% 100%
Operating expenses (436) (499) (515) (657) (209) (892) (3,208) (2,902)
EBITDA 3,201 2,012 592 5,114 453 (489) 10,883 9,663
% of Group Total (1) 29% 19% 5% 47% 4% (4%) 100% 100%
EBITDA margin 88% 80% 53% 89% 68% N/A 77% 77%
Depreciation and amortisation (827) (766)
Costs relating to proposed
- (130)
combination with LSEG
Finance costs (139) (129)
Share of profits less losses of joint
54 17
ventures
Profit before taxation 9,971 8,655
1. % Share of Group EBITDA (including Corporate Items)
44Operating Expenses and Depreciation & Amortisation – Investment in
Talent, Infrastructure and Strategic Initiatives
Staff costs and IT & computer Other operating Depreciation and
Premises expenses Professional fees Total opex
related expenses maintenance exp expenses (1) amortisation
(HK$ mn)
+ 9% + 10% - 5% + 64% + 17% + 11% + 8%
(+0% excluding
Foundation donation)
3,208
2,902
2,150
1,977
766 827
422 465 349 407
96 91 58 95
YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3 YTD Q3
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
Staff costs due to due to maintenance No significant change Professional fees Foundation donation and Total opex due to due to new and
annual payroll expenses for new IT incurred for strategic license fees for MSCI staff costs, IT costs and renewed office leases,
adjustments and systems and network initiatives and consulting contracts professional fees and and roll-out of new IT
headcount arising upgrades, and costs fee for HKATS review Foundation donation systems
from acquisition of from BayConnect
BayConnect in June
2019
1. Includes product marketing and promotion expenses
45YTD Q3 2020 Performance above Historical Trendline
Quarterly performance
(HK$ mn)
Profit attributable to shareholders
Revenue and other income 5,309
Operating expenses (1)
EBITDA 4,773
4,288 4,290
4,150 4,102 4,177
4,057 4,044 3,987 4,009
3,746
3,747 3,571
3,523
3,454 3,722
3,155 3,318 3,307
3,195 3,215
2,879 3,061 3,077 3,038
2,866 2,775 2,984 3,347
2,796 3,048
2,848 2,600
2,751 2,638 2,555
2,567 2,404
2,277
2,971
2,215
2,078 2,608 2,597
2,520 1,946 2,562 2,479
2,045 2,014 2,443
1,897
1,705 2,207 2,262
2,330
2,033 1,979
1,878 1,828
1,716 1,777
1,575 1,531 1,553 1,543
1,432
1,241
1,167 1,146 1,132
983 1,025 983 1,025 1,051
933 968 935 970 949
862 881 829 854 834 834 833 878 887
718
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 2016 2017 2018 2019 2020
2020 performance reflects resiliency of the core business
amid COVID-19 outbreak and macroeconomic uncertainty.
1. Excludes depreciation and amortisation, finance costs, share of profits/(losses) of joint ventures, and costs arising from the proposed combination with LSEG
2. Dotted trend lines are illustrative and do not constitute a forward forecast.
46External Portfolio – Annualised Return of 5.6% since Inception
Point of Injection / Redemption Cumulative gains since inception (HK$ mn)
3000 600
MSCI World 2017: 2018: 2019: YTD 2020:
+23.4% -8.6% +27.1% +1.2% 580
1,600
Return (Net):
1,392
HK$2bn HK$3.3bn 560 1,400
redemption(2)
1,321
injection
2500
each (1) 1,183
540
HK$6bn 1,200
injection
520
1,000 800
2000 500
800
480 638
532
600
460
1500
440 400
420 200
1000 400
0
2016 2017 2018 2019 Q1 1H YTD
2020 2020 Q3
MSCI World Index Bbg Barclays Global Agg Bond Index
2020
As the market rebounded, the external portfolio has fully recovered from the Q1 2020 loss,
resulting in a HK$71mn gain up to YTD Q3 2020.
The cumulative gain of the portfolio since inception amounted to HK$1.4bn (annualised return of 5.6%).
1. HKEX added HK$2bn to the portfolio during the period from Q4 2018 to Q2 2019.
2. HK$3.3bn was redeemed in 1H 2020 and converted into cash and money market funds.
47Comparison of Trading Activity Across Global Exchanges
ADT & Velocity (1) of Major Global Exchanges (US$ billion)
= Last 6 months (May-Oct 20) velocity
= Last month (Oct 20) velocity
= ADT
289% 123% 46%
268% 80% 59% 94% 205% 119% 61% 112% 429% 220% 65% 112% 434% 119% 90% 127% 51%
241.9
111.2
81.6 76.6
52.6
26.9 26.6
15.4 10.3 13.4
8.3 6.1 8.7 9.3 4.8 6.5
1.2
NASDAQ NYSE Cboe TMX B3 LSE ENX Deutsche SZSE SSE HKEX(2) JPX KRX NSE ASX TWSE SGX
Group Börse
Source: WFE and Bloomberg as of Oct 2020 except NYSE and Cboe as of Jun 2020.
1. ADT and turnover velocity takes into account both on-exchange and block trading. For Nasdaq, NYSE and Cboe, trades executed on their trading platforms include those listed on other US
exchanges, hence their turnover velocity covers the whole US market.
2. HKEX ADT includes equities only, excluding ETPs and structured products.
48Global Derivatives Trading Landscape
596
(5 tons equivalent)
No. of contracts
4,122 1,281 1,675 1,664 1,228 237 210 132 83
(in million)
% of volume in 16.4% 58.8% 100.0% 100.0% 100.0% 0.1% 10.0% 100.0% 0.0%
commodities
ADV in million
19.53
8.21 8.16
2.81
6.03 6.02 (5 tons equivalent)
1.16 1.05
0.62 0.41
CME Group ICE (incl. SHFE DCE ZCE HKEX SGX LME CFFEX
LIFFE) Derivatives
Source: Company website, data as of Oct 2020.
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