The Chinese national flag (2nd right) flies alongside the flag of the Hong Kong Special Administrative Region (right) outside the Exchange Square complex, which houses the Hong Kong Stock Exchange, in Hong Kong, China, on May 29, 2020. (PHOTO/BLOOMBERG)

Hong Kong Exchanges & Clearing Ltd posted a 1 percent gain in profit, benefiting from a spate of high-profile mainland stock listings and a pickup in trading as the pandemic and political tensions stoked volatility.

HKEX had a very good first half, set against a turbulent and volatile macro backdrop, reporting record half-yearly revenue and other income, and profit.

  Charles Li, HKEX CEO 

First-half net income rose to a record HK$5.23 billion (US$674 million), on the back of a 13 percent gain in core revenue, the exchange said on Wednesday. Investments slumped 45 percent in the period, dragging down the result.

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Investors have been flocking to the bourse this year, propelling its share price up by almost 50 percent. A number of mainland technology firms have sold shares in the special administrative region amid concern over their US listings. Stock trading jumped 33 percent in the first half, helped by an increase in inflows from the mainland.

“HKEX had a very good first half, set against a turbulent and volatile macro backdrop, reporting record half-yearly revenue and other income, and profit,” Chief Executive Officer Charles Li said in the statement. “High Cash Market turnover, record Stock Connect volumes and a notable number of IPOs, including a number of sizable secondary listings, offset softness in investment income which was impacted by swings in global portfolio valuations during the period.”

The strategy of tying the exchange tighter to the mainland, an overarching aim of CEO Li who’s slated to step down in 2021, is expected to pay off over at least the next few years

The strategy of tying the exchange tighter to the mainland, an overarching aim of CEO Li who’s slated to step down in 2021, is expected to pay off over at least the next few years. The exchange is set to soon welcome a mega listing by Chinese billionaire Jack Ma’s Ant Group, which could be among the biggest such deals ever.

Total raised equity funds, in both IPOs and secondary listings, rose 56 percent to HK$232.3 billion in the period. The bourse’s link to Chinese exchanges had record flows both south and northbound, generating HK$743 million in the first six months of 2020.

The market is betting that HKEX’s prospects will be boosted by an influx of tech giants over the next two to three years, which will drive trading, said Alex Wong, asset management director at Ample Capital Ltd.

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“Interim result hardly matters now, not even 2021’s performance,” he said before Wednesday’s report. “The market is already looking at HKEX in terms of its 2022 prospects.”

Victor Wang, an analyst at China International Capital Corp, and his team predicted trading will rise 10 percent and 24 percent this year and next, respectively, hitting an average daily of HK$150 billion in 2021.