Bullish HKEx Bets at Highest Since 2011 on China Shares: Options
?by Jonathan Burgos
(Bloomberg) — Bullish bets on Hong Kong Exchanges & Clearing Ltd. cost the most in almost four years amid optimism that demand for Chinese shares listed in the city will boost trading volume.
Calls that pay should the world?s second-biggest exchange operator by market value rally 10 percent cost 7.7 points more than equivalent bearish bets as of Jan. 27, the widest gap since February 2011, three-month data compiled by Bloomberg show. Hong Kong Exchanges shares will extend gains this year, after rallying 33 percent in 2014, as higher equities volume and contributions from the London Metal Exchange drive earnings growth, according to Bank Julius Baer & Co. and BNP Paribas SA.
The value of shares traded at the bourse climbed 37 percent to a daily average of HK$80.3 billion ($10.4 billion) in the fourth quarter from a year earlier as the Hang Seng China Enterprises Index, also known as the H-share index, rallied 16 percent. The Shanghai Composite Index soared 37 percent during the period, the biggest advance among 93 global equity gauges tracked by Bloomberg.
?We?re optimistic on Hong Kong Exchanges,? Dominic Chan, an analyst at BNP Paribas in Hong Kong, said by phone. ?We expect further rate cuts in China and that will further boost stock market volumes in Hong Kong. LME is also starting to contribute positively to the growth.?
Hong Kong Exchanges?s profit is expected to steadily increase. Net income will climb to HK$5.1 billion in 2014 and HK$6.7 billion this year from HK$4.55 billion in 2013, according to a Bloomberg survey. The exchange posted revenue of HK$962 million from commodities traded at LME in the nine months ended Sept. 30, accounting for about 14 percent of total revenue of HK$7.1 billion. The bourse?s stock fell 0.2 percent to HK$178.70 today.
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