By Kimberley Kao

Hong Kong Exchanges & Clearing's net profit and revenue hit new quarterly records as trading and listing activity in the Asian financial hub gained momentum, spurred by the volatility in markets and a fundraising boom.

The stock-exchange operator said Wednesday that net profit jumped 37% from a year earlier to 4.08 billion Hong Kong dollars, equivalent to US$525.9 million.

Revenue and other income climbed 32% to HK$6.86 billion, driven by higher trading and clearing fees across the cash, derivatives and commodities markets.

HKEX witnessed a surge in trading volumes during the quarter, with the headline average daily turnover more than doubling to a quarterly record of HK$242.7 billion, HKEX said.

Increased investor interest led to a revival in the city's stock market earlier this year, thanks to a sharp improvement in sentiment toward Chinese tech shares after homegrown startup DeepSeek renewed confidence in China's artificial-intelligence technology.

The emergence of DeepSeek likely fueled "strong investor demand for AI-related stocks" and propelled trading volumes, DBS Group Research said in a note.

Increased southbound activity is expected to continue driving the turnover volume in Hong Kong, and "potential policy stimulus from the Chinese government and possible rate cuts by the Fed could lift investment sentiment and further support trading momentum," DBS said.

HKEX said the IPO market was supported by a number of A share companies pursuing dual listings in Hong Kong.

Funds raised from 17 new listings in the city during the quarter nearly quadrupled to HK$18.7 billion compared with a year earlier. There were 120 active IPO applications at the end of March, up from 84 as of end-December, with 73 new applications during the quarter.

Hong Kong has been pushing to get more companies to list in the city. Over the past year, it has optimized listing procedures, lowered transaction costs to bolster its securities market, as well as adopted measures aimed at greater capital-market cooperation with mainland Chinese companies to boost dual listings.

Still, deteriorating U.S.-China trade relations have raised economic-growth concerns and weighed heavily on markets as investors grapple with mixed signals from tariff developments and trade talks.

Earlier in April, after President Trump threatened to hike China tariffs further, Hong Kong stocks suffered their worst day since the Asian financial crisis. Markets have remained volatile.

Investors' risk appetite will likely "remain subdued in the near term as U.S.-China tensions persist," DBS said.

HKEX Chief Executive Bonnie Y Chan said that while there is a need to ensure resilience against macro volatility ahead, including expanding connections with global markets, the increased participation of Chinese investors and renewed global interest in China continued to build momentum this year.

Shares of HKEX have reflected some of that optimism, rising by about 16% this year to outpace the benchmark Hang Seng Index's 10% gain.

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

(END) Dow Jones Newswires

April 30, 2025 06:55 ET (10:55 GMT)

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