Hong Kong trading, IPOs hurt by geopolitics, says bourse CEO

A “fragile” geopolitical environment has slowed trading volumes and initial public offerings on the Hong Kong stock exchange and created challenges for its commodities business, especially nickel, the bourse’s CEO said on Tuesday.

China-U.S. tensions, exacerbated by the Russia-Ukraine conflict, questions around the tightening regulatory environment for tech and platform companies and concerns about persistent global inflation have “weighed heavily on our markets”, said Nicolas Aguzin, chief executive of Hong Kong Exchanges and Clearing.

“We’re keenly aware that our commodity business, especially nickel has been facing some challenges after the Russia-Ukraine crisis,” added Aguzin, speaking at an event setting out HKEX’s corporate strategy for the coming years.

HKEX’s London Metals Exchange subsidiary suspended activity and cancelled nickel trades earlier this month due to volatility that saw prices double to more than $100,000 a tonne within hours. A spate of technical glitches after trading resumed left traders fuming.

At Tuesday’s event Aguzin re-emphasised that HKEX’s strategy is to focus its attention on connecting Chinese and global capital markets, and said the bourse was working on a series of initiatives to enhance the vibrancy of its markets.

He also acknowledged that the number of people leaving Hong Kong was affecting financial market in the city.

“We’re seeing limited inflows of talent and an increasing number of individuals leaving the city which has resulted in a talent war in the financial industry,” he said.

Hong Kong has recently begun easing stringent anti-COVID measures, which business lobby groups warned were undermining the business environment in the financial hub and causing an exodus of professionals.

Restrictions on daily life and quarantine for inbound travellers remain in place, however.

Author: Alun John, Reuters

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