HKEX to set up two overseas offices in US, Europe to attract more global IPOs, investment, CEO Aguzin says
- ‘As we move to becoming a client-led business, we need to better serve our international clients, to address their needs,’ CEO Nicolas Aguzin says in an exclusive interview
- Aguzin is in Davos for the World Economic Forum, where he will kick off HKEX’s international outreach programme
Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock market, will establish two international offices over the next year to reach out to more overseas investors and market the city as a fundraising destination, according to its chief executive.
One of the offices will be in Europe and the other in the US, Nicolas Aguzin told the Post in an exclusive interview from Davos, Switzerland, where he is attending the World Economic Forum. The exact locations will be announced at a later date, and they will be the first HKEX offices outside Asia. It currently has a presence in Singapore, Beijing and Shanghai.
“What we’re trying to do is to be that bridge between China and the world,” Aguzin said by phone. “Today some 43 per cent of our investors are international investors, and so we have to be close to them. As we move to becoming a client-led business, we need to better serve our international clients, to address their needs.”
He said that the purpose of the new offices was to provide services and support to international companies.
“We don’t want just to be a fundraising hub looking for international capital for Chinese companies. We want to be much more than that. We want to be able to provide to international companies the ability to come to an exciting market like ours, to raise money and raise their profile.”
Hong Kong has been a successful fundraising platform for mainland Chinese companies. Some 1,370 mainland firms are listed here, representing 78 per cent of the market capitalisation. In contrast, HKEX only has 158 international companies listed on the main board, representing 5.1 per cent of the total, according to data from the exchange.
“HKEX is making the right moves at the right time,” said Tom Chan Pak-lam, chairman of Hong Kong Institute of Securities Dealers. “After the HKEX sets up offices in the US and Europe, it can better serve these companies and investors to let them know what Hong Kong’s capital market can offer them.”
The new offices could also help promote Hong Kong as an alternative listing venue to the 273 US-listed Chinese companies that face delisting under the Holding Foreign Companies Accountable Act, starting as soon as the end of 2023 if the present impasse is not resolved.
The potential “mass delisting” of mainland companies in the US could help Hong Kong’s capital market get a boost, Financial Secretary Paul Chan Mo-po said at a seminar organised by the Post in March.
About 80 US-listed Chinese companies – representing 90 per cent of the market capitalisation of all 273 firms listed in the US – could satisfy the listing requirements of HKEX, brokerage China Renaissance said in a report in January.
Many of the big US-listed Chinese internet and technology giants, such as Alibaba Group Holding, which owns this newspaper, JD.com and Baidu, have already opted for secondary listings in Hong Kong over the past two years.
International fund managers will welcome the HKEX’s move to set up overseas offices, said Sally Wong, chief executive of Hong Kong Investment Funds Association.
“Having boots on the ground will help to broaden and deepen the HKEX’s outreach. This is particularly pertinent as geopolitical dynamics is very fluid and you need timely and enhanced communications to enable international investors to put the developments in perspective,” Wong said.
If the HKEX wants to attract international listings, it needs to demonstrate that the Hong Kong platform can enable overseas issuers to effectively tap the mainland investor base, she added.
At present, the stock connect schemes that allow cross border trading do not include overseas listed companies in Hong Kong for mainland investors to trade.
Aguzin, the first non-Chinese to head HKEX, completes one year as the CEO on May 24.
The former JPMorgan banker has introduced many reforms, including allowing listings of special-purpose acquisition companies (SPACs) in January, which has attracted about a dozen applications.
In October, he introduced the first Chinese onshore share futures product, known as MSCI China A 50 Connect Index Futures, which is aimed at global investors seeking to hedge their risks on stocks trading in Shanghai and Shenzhen.
Two weeks ago, the HKEX launched derivatives holiday trading, allowing international investors to continue to trade futures products during holidays in Hong Kong.
“We have to continue diversifying our base. We need to have more derivatives and more international products,” he said.
Aguzin, who is attending the WEF with HKEX chairwoman Laura Cha Shih May-lung and head of listing Bonnie Chan, kicked off HKEX’s revitalised international outreach programme. They will have 50 bilateral meetings with clients and government officials and speak at 45 different forums on a range of topics.
The Argentina-born CEO spent the whole of April on the mainland, meeting officials and counterparts in Beijing, Guangzhou and Shenzhen. Prior to Davos, he was in the US and will visit London next before heading back to Hong Kong.
“I plan to visit more customers and stakeholders around the world in the months to come. It is very important to tell the world that Hong Kong continues to be an international city and we continue to connect China with the world,” he said.
“I do think that putting our story out there trying to tell the world of what is going on in [Hong Kong’s] financial sector is very important.”
Aguzin, however, admitted there were headwinds ahead. “Many countries are kind of starting to look inward, that is a worry,” he said. The other worry, he added, was the border, which has not yet fully reopened.
In London, he plans to meet the staff of London Metal Exchange. It comes after the HKEX’s wholly owned subsidiary was forced to cancel trades and suspend nickel trading for a week in early March as a surge in prices threatened to destabilise the market.
“I am going to be discussing the events that led up to the nickel situation and try to understand how we can improve the market,” he said.
“I actually see the situation at LME as a great opportunity to implement certain market reforms. While this is definitely a big challenge, it [also] is a big opportunity.”
Author: Enoch Yiu, SCMP