By Kimberley Kao

Hong Kong Exchanges & Clearing is scheduled to report results for the fourth quarter on Thursday. Here is what you need to know:

NET PROFIT: The stock-exchange operator is expected to post a 43% increase in net profit to 3.71 billion Hong Kong dollars, equivalent to US$477.2 million, according to the consensus estimate of analysts polled by Visible Alpha. That would compare with HK$2.60 billion a year earlier.

REVENUE: Revenue is estimated to rise 30% to HK$6.32 billion, according to Visible Alpha.

HKEX's shares climbed 5.1% on Wednesday, bringing their gains this year to 23% after a 9.6% drop in the final quarter of 2024. Market sentiment has revived in 2025, driven partly by surging interest in Chinese tech shares after homegrown startup DeepSeek's breakthrough prompted investors to reassess China's capacity for innovation.

WHAT TO WATCH:

--AVERAGE DAILY VOLUME: Improved market sentiment and trading activity in the fourth quarter likely bolstered earnings and the average daily turnover, analysts at Huatai Research wrote in a note. Derivatives trading and investment activity also likely picked up, they said. Citi now has a buy rating on the stock, upgraded from sell, citing the elevated average daily turnover and the recovery in investors' sentiment fueled by enthusiasm over AI.

--IPO PIPELINE: Analysts have noted Hong Kong's robust IPO pipeline, which bodes well for listing revenue and could attract more investment into the city's financial market. Planned listings from Chinese companies such as battery giant CATL and Jiangsu Hengrui Medicine will likely boost the total market cap and the attractiveness of H shares, Huatai Research analysts said. Listing-related revenue likely grew sequentially in the fourth quarter, given the "impressive" number of initial public offerings and more newly listed structured products, they said.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

February 26, 2025 06:18 ET (11:18 GMT)

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