UPDATE 2-Hong Kong exchange picks Chan to be new CEO as challenges mount

(Recasts, adds HKEX share price and IPO data; background on Chan)

By Selena Li and Rishav Chatterjee

Dec 15 (Reuters) - Hong Kong's stock exchange operator named Bonnie Chan as its new CEO on Friday, as it struggles to improve a performance dented by China's economic slowdown and regulatory uncertainties.

Currently co-chief operating officer of Hong Kong Exchanges and Clearing Ltd (HKEX), Chan will replace former JP Morgan banker Nicolas Aguzin, the bourse said in a statement.

Chan, who will become HKEX's first female CEO and currently leads the bourse's listing division, will have to navigate many of the same challenges that her predecessor faced. From the second quarter of 2021 to the third of 2022, HKEX suffered six consecutive year-on-year declines in quarterly net profit.

The change in guard, which will be effective from May, caps Aguzin's three-year tenure as chief executive, during which he had to deal with COVID-19 related challenges, as well as economic, geopolitical, and regulatory uncertainties.

Aguzin took the helm of one of the world's largest stock exchanges in mid-2021 when its share price was near a record level, boosted by high trading volumes, mainly through the stock connect schemes, which link the Hong Kong bourse with mainland markets. The shares have fallen 43% since he joined the bourse.

Chan had previously worked at the exchange for three years from 2007. Prior to rejoining HKEX, she was a partner of Davis Polk & Wardwell LLP, where she oversaw a wide portfolio of clients in Hong Kong and across Asia.

Chan has "an excellent understanding of HKEX's business and its competitive landscape and has played a key role in the execution of the HKEX's strategy over the last few years," the bourse's Chairman Laura Cha said in a statement.

Aguzin was the first non mainland or Hong Kong-Chinese citizen to be permanent CEO of HKEX since its formation in 2000 in a merger of the Stock Exchange of Hong Kong with other local financial market infrastructure providers.

HKEX, which previously benefited from big Chinese companies raising capital in the Asian financial hub has suffered since late 2020 when Beijing cracked down on a broad range of industries, including technology and education sectors, which weakened investor confidence.

A slowing Chinese economy in the last couple of years and restrictions imposed by the U.S. on certain Chinese companies further dampened trading activities, with investors retreating from both China's A-shares and Hong Kong-listed stocks.

To cushion the impact of a slowdown in Chinese companies' fundraising in Hong Kong, HKEX has been looking to attract prospective investors and issuers from the Middle East and Southeast Asia.

In the first three quarters of the year, 47 new listings amassed HK$24.6 billion ($3.15 billion), representing a significant 67% year-on-year drop, with another 115 applicants waiting to be listed as of end-September. ($1 = 7.8056 Hong Kong dollars) (Reporting by Selena Li in Hong Kong and Rishav Chatterjee in Bengaluru; Editing by Sumeet Chatterjee and Alexander Smith)