A report from JPMorgan states that Hong Kong Exchanges and Clearing Limited (HKEX) announced a net profit of 4.3 billion yuan for the fourth quarter of 2025, representing a quarter-on-quarter decrease of 12% but a year-on-year increase of 15%, surpassing JPMorgan's forecast by 19%. For the full 2025 fiscal year, profit reached 17.8 billion yuan, a 36% increase compared to the previous year and 2% above market expectations. The firm anticipates strong share price performance, maintaining its "Overweight" rating on HKEX with a target price of 540 Hong Kong dollars.

The better-than-expected results were primarily driven by revenue performance. Trading and settlement fees exceeded expectations, declining by 14% and 16% quarter-on-quarter respectively, despite seasonal weakness in trading volumes. The average daily turnover for cash equities fell 21% compared to the previous quarter. These factors offset weaker-than-expected custody and market data fees. Earnings also benefited from a non-recurring gain of 163 million Hong Kong dollars arising from the valuation of unlisted equity investments, alongside improved returns on HKEX's corporate funds. These were sufficient to counterbalance increased rebates provided to market participants.

These elements contributed to strong net investment income of 1.2 billion Hong Kong dollars, a 20% increase from the previous quarter, which helped drive the profit beat. It is noteworthy that even after excluding the 163 million yuan gain, pre-tax profit was 5.0 billion yuan, still showing a 16% year-on-year increase and exceeding the firm's forecast by 15%. Cost control was in line with expectations, with total operating expenses rising 7% year-on-year.

For HKEX, this was a robust quarter, with earnings demonstrating resilience despite weaker trading volumes in Q4. The strong net investment income was a positive surprise and could be a source of potential earnings estimate upgrades for the 2026 fiscal year. Following seasonal weakness in December 2025, trading volumes have regained strength. The average daily turnover from the start of the year to date has been approximately 260 billion Hong Kong dollars, even accounting for the quieter Lunar New Year period last week.

Furthermore, as HKEX enters 2026, it has over 400 active IPO applications, a significant increase from the 297 applications recorded in the third quarter.