Hong Kong will provide Chinese investors with financial products and the platform to sharpens its role as the gateway between the world’s second-largest economy and the global capital markets, said Nicolas Aguzin, the new chief executive of the Hong Kong Exchanges and Clearing Limited (HKEX).
“Hong Kong has a key role to play as China continues opening up its market,” Aguzin said via webcast during the annual LME Asia Metal Seminar organised by HKEX unit London Metal Exchange (LME). “During the post-pandemic recovery process, sustainable investment would be a focus. HKEX and LME will play important roles in this journey.”
His speech, on his second day overseeing Asia’s second-largest stock market, was a carefully choreographed public appearance - not unlike the tango of his native Argentina - that studiously avoided market-moving headlines. Instead, the former JPMorgan Chase private banker dived into a homily about sustainability and providing the tools to help China and Hong Kong along the path towards President Xi Jinping’s 2060 carbon-neutral goal.
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HKEX shares surged 5.4 per cent amid an advancing market to HK$474.60, the most in four months. Aguzin, the first non-ethnic Chinese to run the HKEX since its 2000 establishment, is being closely watched for clues on how he would lead the world’s most valuable market operator as he steps into the shoes of his predecessor Charles Li Xiaojia.
During Li’s 11-year tenure, the stock market capitalisation more than doubled to HK$51.8 trillion (US$6.67 trillion) as of Monday, while elevating Hong Kong as the world’s favourite destination for initial public offerings (IPOs) in seven of the past 12 years.
“My nickname is Gucho,” said the 52-year-old former banker, whose HK$106.05 million salary-and-stock package topped his predecessor’s remuneration as Hong Kong’s highest-paid regulator. “I come from Argentina, which is known for its wine, steak, football and tango, but it is also a place with a lot of natural resources.”
Aguzin, who worked in New York and Buenos Aires before living and working in Hong Kong for the past nine years, joint Hong Kong’s Secretary for Financial Services and the Treasury Chris Hui and the HKEX chairwoman Laura Cha Shih May-lung in urging city residents to be vaccinated against the coronavirus.
The HKEX became the first global financial market place to be allowed to invest in a Chinese exchange in February, with a 7 per cent stake in the Guangzhou Futures Exchange, giving it a toehold in one of the world’s fastest-growing clusters of urban centres, known as the Greater Bay Area.
The Guangzhou exchange is poised to commence the trading of futures contracts for carbon emissions, a vital step for China to meet Xi’s goal of turning the nation into a carbon-neutral economy by 2060.
The LME too has a range of sustainability strategies to provide China and help the world’s metal traders achieve the worldwide decarbonisation goal, Aguzin said. Four new contracts will be launched on the LME this year to support sustainability, comprising three for scrap metals, and a contract for lithium hydroxide, a chemical for producing the cathode in lithium-ion batteries.
The metal exchange, which HKEX bought in 2012, will also launch a digital register called the LMEpassport to certify sustainability credentials in various types of metal contracts.
The pillar of the HKEX’s growth over the past decade was the Connect scheme, the brain child of Li and a trans-border investment channel that allowed Chinese individual and institutional investors to tap Hong Kong-listed stocks. It also provided global funds access to China’s stock market via Hong Kong.
The Connect scheme, which covered equities since 2014, was expanded to allow global investors to tap Chinese fixed-income financial products in 2017. The so-called Bond Connect is poised for a southwards extension this year, which would allow Chinese capital to buy global debt traded in Hong Kong.
“Hong Kong has a sound regulatory [environment], rule of law, free flow of information and capital, [and] can play an important roles as a gateway for international investors finding opportunities in Asia and China,” Aguzin said.
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