Hong Kong’s stock exchange operator has notched its best-ever quarterly profit as a flood of trading and initial public offerings boosted the bourse ahead of a new chief executive taking the helm.

Hong Kong Exchanges and Clearing said on Wednesday that post-tax profits jumped 70 per cent year on year in the first quarter to HK$3.8bn (US$490m) as core business revenue driven by turnover and listing fees rose more than a third to a record HK$5.5bn. Investment income swung to a gain of HK$418m from a loss in the first quarter of 2020.

The bourse’s first-quarter performance benefited from a series of high-profile IPOs by Chinese technology companies, including that of short video platform Kuaishou, which raised more than $5bn in February.

Chinese groups trading in New York have added to the flow of big-ticket share sales in Hong Kong this year. Tech groups Baidu and Bilibili were among the companies that launched secondary listings in the city as US regulators prepared to forcibly delist groups that failed to comply with domestic accounting requirements.

“HKEX has had a strong start to 2021,” said Calvin Tai, interim chief executive, who pointed to a “buoyant IPO market and very robust trading volumes . . . set against a challenging economic and geopolitical backdrop”.

HKEX’s shares, which have doubled over the past 12 months, slipped 0.2 per cent in Hong Kong following the results announcement.

Line chart of Share price (HK$) showing HKEX’s stock has surged over the past year

Hong Kong’s position as an Asian financial hub has been called into question after Beijing imposed a draconian national security law on the city last year.

But efforts by rival exchanges in Shanghai and Shenzhen to internationalise, long a concern for HKEX, have made only limited progress. Growing hostility towards China in Washington has reinforced Hong Kong’s role as an offshore fundraising centre for Chinese companies.

“Hong Kong is still an offshore market as far as mainland China is concerned. Near offshore but still offshore,” said one HKEX insider. The Shanghai exchange’s “plans to internationalise are unlikely to undermine Hong Kong because the domestic market still suffers from a lack of capital convertibility for companies that want to raise currencies other than renminbi offshore”.

Earnings at HKEX were also boosted by trading by mainland Chinese investors in Shanghai and Shenzhen, who have snapped up stocks on Hong Kong’s market through so-called stock connect programmes.

HKEX reported average daily turnover of almost HK$61bn via mainland investors in the first three months of 2021, helping take the exchange’s total daily turnover to a record HK$224bn.

Trading by international investors in Chinese stocks and bonds through connect programmes also reached highs, with daily turnover climbing to Rmb127bn (US$20bn) and Rmb25bn, respectively.

But Louis Tse, managing director of brokerage Wealthy Securities, said turnover had dropped off at the start of the second quarter as trading by mainland investors cooled and Beijing cracked down on Chinese tech groups, many of which trade in Hong Kong.

“The [record regulatory] penalty for Alibaba sent a shockwave through tech stocks,” Tse said. “That cooled down the speculative mood in the market and slimmed down turnover.”

Tai, the interim chief executive, was tasked with steering the exchange following the departure of predecessor Charles Li, who held the role for a decade and launched both the stock and bond connect programmes. Li also led the bourse during its failed $32bn bid to buy its London counterpart in 2019.

Nicolas Aguzin, a former senior banker at JPMorgan, is set to take the reins at HKEX in May.