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Speaker 1: Let's talk about China, and let's talk about Hong Kong,

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Speaker 1: more specifically Hong Kong Stock Exchange missing profit estimates today

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Speaker 1: for the second quarter, sluggish trading, a slow pace of

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Speaker 1: initial public offerings raised some questions about the future. And

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Speaker 1: please to say that joining us now is Nicholas Goes

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Speaker 1: in the Hong Kong Exchanges and Clearing CEO. Nicholas want

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Speaker 1: for to catch up with you, sir. We want to

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Speaker 1: talk about what's developing on the mainland. But also I

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Speaker 1: have a more pointed question for you. Are you expecting

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Speaker 1: the government to lower stamp duty to boost trading?

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Speaker 2: Hi, Jonathan, good to be here.

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Speaker 3: It's it's you know, the thing that we're most excited

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Speaker 3: about is about what we've been doing in terms of

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Speaker 3: making our market more accessible, making sure that we continue

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Speaker 3: lowering our cost. We cannot manage the stamp duty. I mean,

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Speaker 3: what we've been doing is we lower the trading tariff

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Speaker 3: for a lot of our participants.

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Speaker 2: And what we're seeing is.

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Speaker 3: That the market is very vibrant on the derivative side

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Speaker 3: and a little bit softer on the cash side. But

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Speaker 3: as you know our results, we're up thirty one percent

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Speaker 3: on a net income basis.

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Speaker 2: So we're very glad about that.

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Speaker 1: You can't do anything about it, but I have you've

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Speaker 1: spoken to the relevant authorities on the issue.

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Speaker 3: I mean, we were constantly talking to all policy makers

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Speaker 3: about how to improve our markets, how to make sure

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Speaker 3: that we make it more vibrant. That decision is something

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Speaker 3: that they do it on themselves, and they take into

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Speaker 3: account all the different factors in terms of like the

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Speaker 3: benefits that there may be pros conceptc.

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Speaker 1: You'll forgive me for labor in the point jumping back

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Speaker 1: in Nicholas, But if we could answer a little bit

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Speaker 1: more clearly as to one whether you've had that conversation,

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Speaker 1: and two whether you think it would make a difference.

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Speaker 1: It's just a yes or no. It's that conversation taking place.

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Speaker 3: Yeah, yeah, we are not currently engaged in any conversation.

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Speaker 4: Right other there is a larger question. As you talk

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Speaker 4: to clients, you emphasize what you are doing, do you

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Speaker 4: get a lot of questions around what you're not going

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Speaker 4: to be able to control in terms of what the

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Speaker 4: authorities are going to do, whether it's limiting how much

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Speaker 4: you can sell versus buy, or what kind of free

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Speaker 4: market parameters are put around share trading.

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Speaker 3: Hong Kong is a very international market, as you all know,

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Speaker 3: there's no restriction in the flow of capital.

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Speaker 2: I mean, we're very.

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Speaker 3: Exposed to like all the activities that happen around the world,

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Speaker 3: and therefore, I mean it's the same as like most

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Speaker 3: markets around the world. So free flow of capital, access

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Speaker 3: to information, free access to information, and what we want

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Speaker 3: to do is to make sure that we continue connecting

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Speaker 3: East and west. That's our core objective and that's what

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Speaker 3: we've been doing and improving in our market.

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Speaker 4: How much you see in companies and frankly investment banks

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Speaker 4: shift to Singapore, which is something that we keep hearing

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Speaker 4: about as an alternative to Hong Kong, just as it

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Speaker 4: gets more connected to mainland China.

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Speaker 3: Yeah, I do think that during the COVID period it

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Speaker 3: was a challenging period for Hong Kong. At this point,

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Speaker 3: I mean, I'm not seeing a lot of that. I mean,

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Speaker 3: on the contrary, I do see a lot of people

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Speaker 3: that are returning with the new availability of flights and

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Speaker 3: being able to move around. We're seeing a lot of

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Speaker 3: visitors come in and we're seeing more and more people

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Speaker 3: coming into Hong Kong. International bankers are coming here finance companies,

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Speaker 3: hedge funds, etc. So we are seeing this, you know,

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Speaker 3: as a much more vibrant environment compared with the last

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Speaker 3: two years.

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Speaker 4: Five years ago, ten years ago. A lot of the bankers,

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Speaker 4: the international bankers who came to Hong Kong or from

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Speaker 4: the US, from the United Kingdom, has that demographic shifted.

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Speaker 4: Are you seeing more from other places that are outside

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Speaker 4: of the main European and US markets?

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Speaker 2: Yeah, we are seeing people come from all over the world.

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Speaker 3: That give the example, last year we hired our CFO

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Speaker 3: at the Hong Kong Stock Exchange that came from Zil

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Speaker 3: used to be the CFO of B three. So so

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Speaker 3: people are coming from Southeast Asia, from from from the Americas, Europe,

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Speaker 3: and so the demographic continues to be very international in

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Speaker 3: Hong Kong with people coming from all.

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Speaker 2: Over the world.

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Speaker 1: Nickolas, You're gonna love me by the end of this conversation.

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Speaker 1: But I just want to ask another question. If that's

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Speaker 1: okay we're reporting the Chinese authorities, if are some funds,

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Speaker 1: some investment funds in China this week to avoid being

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Speaker 1: net sellers of equities, Can I just ask you if

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Speaker 1: you're familiar with that request?

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Speaker 2: Yeah, I'm not. I'm not aware of any of that.

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Speaker 3: And essentially, you know, our role is to have like robots,

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Speaker 3: transparent markets in Hong Kong. You can come and hedge exposure,

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Speaker 3: whether it's fine selling, totally free market and totally available

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Speaker 3: for investors to to hedge their exposures, whether it's a

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Speaker 3: net shorter and eSeL.

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Speaker 1: Do you think those kind of decisions under mind transparency?

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Speaker 3: And again I'm focusing in our own markets. So our

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Speaker 3: own markets are very very transparent, very liquid, and right

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Speaker 3: now our focus is to allow the markets to determine

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Speaker 3: the prices.

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Speaker 1: Does it frustrate you that in many cases your home

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Speaker 1: market is conflated by what happens on the mainland. Does

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Speaker 1: that make doing business increasingly difficult?

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Speaker 3: Our market is affected by geopolitics, is affected by the

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Speaker 3: global macro environment, and we've we've been trying to make

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Speaker 3: sure that we provide even more tools for investors to

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Speaker 3: to headd some of those positions that they may have.

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Speaker 3: And that's why you see that our derivatives business actually

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Speaker 3: in the last quarter had a record number. We traded

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Speaker 3: one point four million derivatives per day. So the role

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Speaker 3: that we have is we want to be at risk

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Speaker 3: management center for those people that want to invest in China,

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Speaker 3: also for people from China that want to invest around

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Speaker 3: the world, and we think that we perform an amazing

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Speaker 3: service at doing that.

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Speaker 1: There is a belief at the moment that investing in

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Speaker 1: China is becoming more difficult because of a lack of transparency.

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Speaker 1: We've talked about the Youth Unemployment Right no longer being published.

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Speaker 1: There are official reasons for that, and there are reasons

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Speaker 1: that the majority of people that we speak to believe,

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Speaker 1: which is to it's high and they don't want to

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Speaker 1: report it anymore. Does that undermine some of the volume

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Speaker 1: coming through your exchange that wild typically take exposure to China,

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Speaker 1: which now sees some of these issues as quote uninvestable.

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Speaker 3: At times, I think that the world is massively underinvested

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Speaker 3: in China, and similar China's massively invested the world. So

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Speaker 3: what we see is that over time, even though we

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Speaker 3: may go through some periods that are certain lows, over

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Speaker 3: time we're going to see more and more investments coming

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Speaker 3: into China. Because China represents eighteen percent of the global GDP,

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Speaker 3: and today when you look at international funds, I mean

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Speaker 3: it's only about one to two percent there's like sixty

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Speaker 3: to seventy percent of the funds that today have zero

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Speaker 3: investment in China. I don't think that is sustainable over time.

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Speaker 3: Now we may see some ebbs and flows because of

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Speaker 3: macro situation, geopolitics, but if I have to bet on

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Speaker 3: the long term and the growth opportunities, that is a

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Speaker 3: massive opportunity.

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Speaker 2: So you may see some periods of.

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Speaker 3: Time where volumes go down and others that go up,

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Speaker 3: and we've seen that over the last couple of years.

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Speaker 2: But at this.

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Speaker 3: Time, if I have to guess what the best thing

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Speaker 3: is is to focus on the medium term, long term

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Speaker 3: and in the long term, I don't have any doubts.

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Speaker 1: Well, we appreciate the update this morning, sir, thanks for

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Speaker 1: being with us Nicholas Iguz in the of Hong Kong

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Speaker 1: Exchanges and Clearing