Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock market, will introduce more yuan products and more measures to boost the exchange’s international status, said its chairman Carlson Tong Ka-shing as he met the media for the first time since taking the top job in April.
“We will introduce more yuan products for international investors to invest in a bid to promote the international usage of the currency, which is important to enhance Hong Kong’s role as a connector between China and the world,” Tong said as he unveiled his vision in a media briefing on Friday after a ceremony marking HKEX’s 24th anniversary as a listed company.
“HKEX will also continue to promote the city’s international status. We will introduce more measures to boost market turnover and more new listings, as well as promoting the connect schemes to allow more capital flow between China and Hong Kong.”
He was the chairman of the Securities and Futures Commission from 2012 to 2018. Before that, he was the chairman of KPMG China from 2007 to 2011 and also headed HKEX’s listing committee from 2006 to 2008.
A key challenge for Tong is to recapture Hong Kong’s global status as a top venue for initial public offerings (IPOs).
Hong Kong’s main board was the top venue worldwide seven times between 2009 and 2019, but it dropped to the 10th in the first quarter amid a deal drought. However, market momentum has turned around in the second quarter, with 18 IPOs raising a combined HK$8.7 billion (US$1.1 billion) since April – a notable improvement from the five deals that raised HK$2.18 billion in January, followed by a fallow February.
“I am very positive about the IPO outlook,” he said. “We have 27 new listings and 70 new applications this year, much higher than the second half of last year.”
HKEX was established in March 2000 through the merger of the stock exchange, the futures exchange and three clearing houses. It was listed in its own stock market on June 27, 2000, at HK$3.88 a share. A purchase of 1,000 shares then would be worth HK$257,000 now.
In the 24 years since, average daily market turnover has risen by 8.5 times to HK$110 billion as of the first five months of this year, while average daily derivatives trading has increased by 42 times to 1.56 million contracts as of May. The number of listed companies has risen from 790 to 2,614, while total market capitalisation has grown sevenfold to HK$33 trillion.
HKEX’s revenue and other income have increased from HK$2.3 billion in 2000 to HK$20.5 billion in 2023, reflecting solid fundamentals and the diversification of revenue streams.
Another of Tong’s tasks is to carry out scrapping of the 70-year-old practice of halting trading on stocks and futures when the Hong Kong Observatory issues a No 8 typhoon signal or a black rainstorm alert.
“We have given a three-month grace period to allow the small brokers to have more time to prepare the new weather policy, which should be sufficient,” Tong said.
“The stock markets overseas and in Shanghai and Shenzhen all continue to trade during typhoons or other bad weather. Hong Kong is the only major market that still closes during the typhoons. We need to change our policy to catch the international trend.”