The Hong Kong Stock Exchange (HKEX) has, on February 29, seen its first-ever listings of covered call ETFs, according to a media release.
A covered call is a strategy where an investor sells call options on an asset they already own, generating income in the form of a premium. This allows investors to benefit from potential asset appreciation up to the strike price, and during times of volatility, the options premiums can provide downside protection to investors, the media release said.
Wanyoun Cho, chief executive officer (CEO) of Mirae Asset Global Investments (Hong Kong), said in another media release: “[A] covered call strategy provides a relatively stable income for investors, especially during rangebound scenarios. Global X ETFs is proud to pioneer the first covered call ETFs in Hong Kong, offering investors a unique opportunity to increase income potential and enhance downside protection.”
Exchange traded products (ETPs), including ETFs and leveraged and inverse products (L&I products), are one of the fastest-growing segments in HKEX’s markets, the HKEX release said. Average daily turnover in the ETP market reached an all-time high of HK$14 billion ($1.79 billion) in 2023, up 17% from a year earlier.
Roberts added: “This type of strategy typically requires a level of expertise and involves active trading. However, an ETF that incorporates a covered call strategy can help investors save time, generate passive income, and remove the complexity of managing downside risks on their own. We look forward to welcoming more of these and other ETFs to our markets in the coming months ahead.”
Last November, Hong Kong saw the first Saudi Arabian ETF in Asia Pacific, which was also the world’s largest Saudi ETF with over HK$8 billion in asset under management (AUM).
Results
Aguzin leaves after revenue and other income and profit in 2023 were the second best on record, after an “exceptional” 2021.
2023 revenue and other income was HK$20.5 billion, 11% higher than 2022, while profit attributable to shareholders was HK$11.86 billion, 18% higher than 2022. Core business revenue was up 3% against 2022, attributable to record net investment income from margin funds and clearing house funds; and increase in London Metal Exchange trading and clearing fees in 2023.
The increase was partly offset by lower trading and clearing fees from lower listing fees.
The net investment income from corporate funds was HK$1.49 billion, compared with a loss of HK$48 million in 2022, driven by gains on the external portfolio of HK$421 million, which saw losses of $486 million in 2022, and higher investment income from internally-managed corporate funds, partly offset by the non-recurring losses on valuation of the group’s unlisted equity investments of HK$246 million.
Operating expenses were 7% higher than 2022, attributable to higher staff costs and IT costs
Aguzin said: “HKEX delivered a strong set of 2023 full-year results, fuelled by notable growth in its derivatives, fixed-income and currencies business. Despite the persistent challenging global backdrop and softer cash market, we are pleased to be reporting our second-best revenue and other income, and profits, on record, with profit attributable to shareholders for 2023 up 18%.”
He added: “Excellent strategic progress complemented the group’s financial performance, with delivery of new milestones in the Connect programme, including the launch of Swap Connect and HKEX Synapse; the opening of new group offices in New York and London, better supporting our customers on-the-ground across time-zones; and the rollout of new enhancements to HKEX’s listing franchise, including Chapter 18C and the launch of FINI.”
“A particular highlight [in 2023], has been the success of the group’s continued product diversification focus and market microstructure enhancements, which have been instrumental in driving new daily trading records in 2023 for HKEX’s equity derivatives, Rmb Currency Futures, OTC Clear and ETP markets,” Aguzin continued.
Looking ahead, he said: “Whilst the macroeconomic and geopolitical environment remains turbulent, we are cautiously optimistic that, as sentiment improves, we are well placed to capitalise on the global pivot to Asia, on Hong Kong’s unique role as an East-West superconnector, on our unrivalled China advantage and on the megatrends, such as sustainability, that are shaping capital markets around the world.”
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