|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||63.00 - 65.70|
|52 Week Range||25.91 - 74.21|
|Beta (5Y Monthly)||0.86|
|PE Ratio (TTM)||65.84|
|Forward Dividend & Yield||0.96 (1.44%)|
|Ex-Dividend Date||Aug 31, 2020|
|1y Target Est||N/A|
(Bloomberg) -- A year anticipated to be full of headwinds for Hong Kong’s stock exchange turned euphoric instead. The challenge is now to add to the momentum.Hong Kong Exchanges & Clearing Ltd. on Wednesday reported that profit rose 23% to a record HK$11.5 billion ($1.48 billion) in 2020.Incoming Chief Executive Officer Nicolas Aguzin is preparing to take the helm after a year when trading jumped 60%, the bourse saw the biggest initial public offering flood in a decade and inflows of cash through links to Shanghai and Shenzhen doubled. Political tension drove a bevy of high-profile Chinese firms to find a new home in Hong Kong on concern they would be booted off U.S. exchanges, their long-time source for funding.The boom has continued in 2021 and investors have cheered. The stock is up 150% in the past 11 months. The bourse is now the world’s biggest in terms of market value, far bigger than its London rival and four times as big as Nasdaq Inc., for example.The exchange’s shares fell on Wednesday amid reports the city will raise the stamp duty on stock trading for the first time since 1993, potentially cutting trading volumes. The shares were down 5.4% as of noon. “HKEX faces several uncertainties,” said Alex Wong, director of asset management at Ample Capital Ltd., citing a push to open up to yuan-denominated products and getting further links to China, such as ETF Connect and Primary Connect.Aguzin, who’s slated to take over in May but still needs regulatory approval, faces pressure to build on the legacy of his successor Charles Li, who became known as “Mr. China” for convincing Beijing to set up mainland stock trading links, which now account for 10% of the exchange’s revenue.The appointment of Argentina-native has been met with skepticism in the city because of his outsider status. Being the first non-Chinese CEO, his ability to navigate the halls of power in Beijing, has come under question.That could now largely fall on Chairman Laura Cha, who as the former vice chairman of China Securities Regulatory Commission, is well connected in the country. But Cha is also seen as less likely than Li to try to push reforms on Beijing.Plans to allow mainland investing in IPOs and trading in futures of Chinese shares have so far seen little progress. In an effort to build up its own exchanges, Beijing has also so far nixed allowing investments in dual listed companies -- technology giants such as JD.com Inc., Alibaba Group Holding Ltd. and NetEase Inc.“As H.K. and mainland China markets become increasingly connected, the relationships of the company and the new CEO with mainland China regulators would increasingly matter to further broaden the mutual market access,” said Yafei Tian, an analyst at Citigroup Inc., in a recent report.The appointment of a veteran investment banker rekindled some anticipation that the bourse would again try its hand at acquisitions. Plans to internationalize have largely been put on hold since Li famously embarked on a failed bid to buy the London Stock Exchange in 2019.“There’s a broad array of organic and inorganic growth options in front of us,” said Fred Hu, a board member and founder of Primavera Capital Ltd. “And Aguzin is well positioned to take HKEX into the future, to further deepen the connectivity with China but also connectivity with the rest of the world.”Analysts for now are bullish the exchange can continue to ride the current boom of more mega-IPOs. It could also get a boost from a proposal by Hang Seng to expand the city’s benchmark index from the current 50.Hang Seng Proposes Major Overhaul of Hong Kong Stock Index (2)That could propel the share price above HK$600, according to Steven Leung, executive director at UOB Kay Hian (Hong Kong). China International Capital Corp. has a target price of HK$634.“IPOs and the daily turnover level matters more to the HKEX share price than the new CEO’s strategy, which is more mid- to long-term,” said Leung. Nonetheless, the exchange should explain further the decision to name a non-Chinese speaker as CEO and why it was announced before getting the regulatory approval, he said.(Updates with earnings in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Shares in Hong Kong’s bourse operator tumbled after the city’s government said it would raise the stamp duty charged on equity trades in the Asian financial hub, threatening the group’s biggest revenue stream. The move by finance secretary Paul Chan on Wednesday to increase stamp duty from 0.1 to 0.13 per cent of the value of each trade came as Hong Kong Exchanges and Clearing reported record profits for the 2020 financial year. Shares in HKEX fell by as much as 12.3 per cent before later trimming losses to 8.8 per cent. The Hang Seng index of stocks that trade in the city fell as much as 3.5 per cent — its biggest intraday drop since May, when the market was hit by reports that Beijing was planning to impose a draconian national security law on Hong Kong.
Hong Kong Exchanges and Clearing (HKEX) was backed into a corner by a news leak when it broke protocol two weeks ago in announcing its first appointment of a non-ethnic Chinese chief executive without first securing the written approval of the city's securities watchdog, according to a source familiar with the matter. The appointment of JPMorgan Chase's head of global private banking, Nicolas Aguzin, also known as Gucho, was leaked to news outlets on February 9, hours before any announcement by the HKEX, which itself is listed on the city's exchange. An urgent online meeting of the 13 directors of HKEX was called within an hour after the news was reported by the media, including the South China Morning Post and Bloomberg News, according to the source. Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China. "We discussed three options and decided on the best option," the source added. The selection of JPMorgan Chase's Asia-Pacific chairman and CEO Nicolas Aguzin as the new HKEX CEO is subject to the approval of the SFC. Photo: Handout alt=The selection of JPMorgan Chase's Asia-Pacific chairman and CEO Nicolas Aguzin as the new HKEX CEO is subject to the approval of the SFC. Photo: Handout The first consideration was whether the board should deny the news but the board rejected such an idea immediately as Aguzin had already been identified as the best candidate a few months earlier, the source said. Another option was to decline to comment, but that was not ideal as HKEX is a listed company and has to follow listing rules to disclose any price sensitive information. Eventually, the board unanimously decided to announce the appointment after market close while noting the choice would need the approval of the Securities and Futures Commission or SFC. The board, the source added, found this as the most appropriate approach to maintain transparency and in public interest. The announcement by the HKEX before securing the SFC's approval is unusual. According to Hong Kong's Securities and Futures Ordinance, the exchange's nomination of a CEO requires the watchdog's approval in writing. The HKEX followed the rule to the letter when it announced Charles Li Xiaojia's appointment in June 2009. The source rejected market speculation that the HKEX released the appointment details before getting the SFC's approval in a bid to pressure the regulator to agree on its choice of CEO. "The HKEX fully respects the vetting decision of the SFC," the source added. A day after the HKEX's announcement, a special meeting convened by the SFC's board of directors decided it would spend an undefined amount of time to vet Aguzin to make sure he was "fit and proper" to run the exchange. Laura Cha, chairwoman of Hong Kong Exchanges & Clearing. Photo: Bloomberg alt=Laura Cha, chairwoman of Hong Kong Exchanges & Clearing. Photo: Bloomberg As CEO of HKEX, Aguzin will need to carefully balance the exchange's desire to expand globally and attract overseas companies to list in Hong Kong with policy directions emanating from Beijing. If the SFC approves Aguzin's candidacy, his leadership will take effect from May 24 for a term of three years. Aguzin would succeed Li - a former banker from the same US bank, who grew up in Beijing. During his 11 years at the exchange, Li established the different connect schemes with China to boost cross border stock and bond trading. Some brokers have voiced concern that Aguzin's lack of Cantonese or Mandarin skills would hamper his ability to communicate and build ties with China. Mainland companies account for 80 per cent of HKEX's US$7 trillion market capitalisation. HKEX chairwoman Laura Cha earlier had informed the board that she had communicated with some Hong Kong government and mainland officials that the new CEO could be a foreigner without giving a name, the source said. Beijing and the Hong Kong government were surprised but so far have not given any opinion. During the selection process last year, the exchange had considered Hongkongers, mainlanders and international candidates, the source said. After due diligence the board finally concluded that Aguzin was the best candidate considering his experience as a senior international banker who had guided JPMorgan's expansion in China in recent years. They also noted that the Argentinian's international network built assiduously over 30 years at the US bank would help expand HKEX's global outlook. As an international banker, Aguzin could also help to strengthen the confidence of international investors in Hong Kong as some have raised doubts about the future of the city after the social unrest in 2019 and introduction of national security law last year, the source said. If the board had considered a mainland banker for the CEO's position, it would not have added too much value to building and strengthening international ties. Under Cha's leadership, a former vice-chair of the China Securities Regulatory Commission from 2001 to 2004, the HKEX has a strong connection with mainland officials and will continue to make sure the bourse is contributing to China's development plan, the source added. Aguzin is aware of the challenges that lie ahead and knows China holds the key to HKEX's success. "I think China is leading the global unicorn race ahead of the US," Aguzin said in an interview with the Post in 2018. Some big Chinese companies have created an ecosystem for innovation and are incubating some of the best technologies in the e-commerce, financial, health care, mobility and entertainment sectors, the banker added in that interview. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.