Speaker 1: The Hong Kong Stock Exchange held the hk EX Connect
Speaker 1: Summit Monday to mark the tenth anniversary of the city's
Speaker 1: cross border stock link. For more on the celebration, Bloomberg
Speaker 1: Steven Engel spoke with hk EX CEO Bondi.
Speaker 2: Chin on a very momentous occasion, the tenth anniversary. Well,
Speaker 2: yesterday was I believe of the stock connect program Shanghai
Speaker 2: first and shen Jen a couple years later, obviously resounding
Speaker 2: success according to your assessment, surely, but there's room to grow.
Speaker 2: How would you say from that tea house meeting between
Speaker 2: Charles Lee of the hk EX and also I believe
Speaker 2: the Shanghai Boyds chairman back in twenty twelve, that would
Speaker 2: grow to this size.
Speaker 3: Yeah, thank you, Steve. And it's certainly a very momentous moment.
Speaker 3: Ten ten years of the connect story. I think we're
Speaker 3: still actually at the beginning. If you look at the
Speaker 3: volume so far from the very beginning, southbound traffic has
Speaker 3: actually grown fifty times, and no found traffic has also
Speaker 3: grown twenty five times. And this is quite amazing. And
Speaker 3: if you ask me how we're going to continue to
Speaker 3: expend it, I'll say three ways that we're going to
Speaker 3: do it. First of all, products, we need to put
Speaker 3: a more products onto the shelf. As you know, we
Speaker 3: started with stock and then we expanded it to include
Speaker 3: bonds ETFs. We're going to soon have reads.
Speaker 2: But there is Can I jump in and say there's
Speaker 2: no date.
Speaker 3: Yet, Well, we're working on the details. I mean, certainly
Speaker 3: with every enhancement, we need to make sure that you know,
Speaker 3: all the screws are tieden up, uh and there is
Speaker 3: still a lot of a lot of white space that
Speaker 3: we can fill in. So that's the first dimension. Secondly,
Speaker 3: the micro infrastructure, which is very important. We need to
Speaker 3: make sure that the users of the Connect franchise have
Speaker 3: a good experience. And I think you know, very recently
Speaker 3: we've proven that with micro infrastructure changes, the market can
Speaker 3: be greatly enhanced severe weather trading as an example. I
Speaker 3: think we've proven to the world that you know, Hong
Speaker 3: Kong as a market has stepped up to that moment.
Speaker 3: And then third, but not you know, the last it's
Speaker 3: the fact that at the moment, you know, the participants,
Speaker 3: I think it's still a relatively small pole. I've been
Speaker 3: traveling a lot recently and I would say that you know,
Speaker 3: the Connect story is still pretty novel to a lot
Speaker 3: of our friends in the world, and so I'm going
Speaker 3: to go out there and continue to market the Connect story.
Speaker 2: You've traveled a lot. You've been obviously to Riad, You've
Speaker 2: been back and forth to Shanghai and Beijing. You just
Speaker 2: came back from Lima. Apeg that's right. What was the
Speaker 2: key takeaway there? Before we get into these steps, we
Speaker 2: need to talk about primary connect and the other things
Speaker 2: that have been promised but have not delivered. But what
Speaker 2: did you what was your key takeaway quickly on Apec?
Speaker 3: Okay, so my first takeaway from APEC is that I'm
Speaker 3: very happy to see that countries are still very willing
Speaker 3: and keen to make friends with one another. So, you know,
Speaker 3: while I hear a lot about you know, geopolitics and
Speaker 3: all that and how it's going to jump down markets,
Speaker 3: what I saw on Lima is quite the contrary. So
Speaker 3: that is a big encouragement. And secondly, the reason why
Speaker 3: I'm traveling so much is really to get you know,
Speaker 3: the story of Hong Kong and connect out to the
Speaker 3: rest of the world. You know, in this region, I
Speaker 3: think a lot of people understand, you know, the impact
Speaker 3: of Connect and what it brings in terms of enhancing
Speaker 3: the two way capital flows between China and the rest
Speaker 3: of the world. But a lot of you know, the
Speaker 3: rest of the world, it's still you know, learning about it,
Speaker 3: and so it's important for that kind of engagement.
Speaker 2: Would you say the Connect program still though, has its
Speaker 2: training wheels on. I mean there's a bit of shackles
Speaker 2: and there's been promises to grow it. Primary Connect is
Speaker 2: the big one, obviously. Charles Lee back in twenty seventeen
Speaker 2: said this is the next big thing, right, This market's
Speaker 2: been waiting for that. Chinese investors have been waiting for
Speaker 2: this to get these primary listings into the stock Connect
Speaker 2: some would say that it held back a Ramco from
Speaker 2: even thinking about Hong Kong.
Speaker 3: Well, it's very interesting you talk about, you know, how
Speaker 3: everyone is waiting for it. I think that basically showed that,
Speaker 3: you know, the Connect franchise has a lot of promise,
Speaker 3: and in fact, I think the eagerness really stems from
Speaker 3: the fact that a lot of investors around the world
Speaker 3: want to take advantage of the growth of the China market,
Speaker 3: both in terms of what corporates it's turning out right,
Speaker 3: those are great investment opportunities as well as the investor
Speaker 3: base that China as a country is capable of providing
Speaker 3: the world. So my duty, my responsibility running the change
Speaker 3: is really to continue to build it with those three
Speaker 3: dimensions I just mentioned.
Speaker 2: Sure, so Northbound has been pretty fruitful for international exposure
Speaker 2: into China. I think over the past decade foreign holdings
Speaker 2: of Chinese stocks have jumped more than twenty four But
Speaker 2: this primary connect would allow mainland investors to come in
Speaker 2: and participate in what used to be the one of
Speaker 2: the hottest IPO markets in the world. Right, So what's
Speaker 2: holding it back?
Speaker 3: Oh? Well, okay, so you're absolutely correct that there is
Speaker 3: a lot of interest. In fact, if you think about
Speaker 3: the reason Raley, we had at the end of September
Speaker 3: and early October, we saw a very big jump in
Speaker 3: terms of self bound flow, and I think that illustrates
Speaker 3: the fact that, you know, there's a lot of accumulation
Speaker 3: of wealth in the mainland, a very fast growing middle class,
Speaker 3: and they're looking for diversification, right, And therefore I think
Speaker 3: what we have to do at HKIX is really to
Speaker 3: continue to build primary connect. I know is something that
Speaker 3: a lot of people talk about but that's not the
Speaker 3: only thing. We have a long list of to do
Speaker 3: for how we're going to continue to develop the Connect franchise.
Speaker 2: Okay, what's holding it back? Though I know you can't
Speaker 2: really I'm getting a sense you can't really tell me.
Speaker 2: I mean, where are we in the dialogue with Beijing?
Speaker 2: Because I know they're worried at a during a slowing economy,
Speaker 2: They're worried about outflows.
Speaker 3: Obviously, So I think everything has its moment and to
Speaker 3: make sure that it's successful, you want to capture the
Speaker 3: best moments, right So, Ipeel, you know you're very focused
Speaker 3: on it. I can see the world has gone through
Speaker 3: a couple of years with relatively muted IPO activities. We
Speaker 3: are very happy that we're seeing a strong pickup in
Speaker 3: the Hong Kong market, and therefore, you know, I think
Speaker 3: we just need to continue to build on that and
Speaker 3: make sure that in fact, the strength of the IPO
Speaker 3: market returns. And I think with a stronger base and
Speaker 3: you know, a more robust pipeline, the conditions will be riper.
Speaker 2: Okay, So right now that the conditions are not necessarily right,
Speaker 2: we raised about nine billion this year, I believe five
Speaker 2: and a third billion last year, so it's better than
Speaker 2: last year, but it's way off of twenty twenty. Was
Speaker 2: it twenty there was fifty three billion or something like that,
Speaker 2: So you have a ways to go. So again I'm
Speaker 2: going to come back to the primary connect. Is it
Speaker 2: on the docket for next year?
Speaker 3: Okay? So let's talk about where we are in terms
Speaker 3: of the IPO activities. And I'm very happy to report
Speaker 3: it because last time we spoke, I think, you know,
Speaker 3: in terms of our league table ranking, we are a
Speaker 3: little bit bit sort of at the bottom.
Speaker 1: Of the top ten.
Speaker 3: Shore we say we're now and we have completed a
Speaker 3: very big IPO idea, which is a four point six
Speaker 3: billion US IPO, the second largest in the world this
Speaker 3: year and the largest in the consence. Yeah, since February
Speaker 3: twenty twenty one.
Speaker 2: As Holdings possibly too.
Speaker 3: I think they are about to launch.
Speaker 2: They just announced that they've been Bard approval.
Speaker 3: Going hopefully to bring our total fundraise this year to
Speaker 3: above ten billion US, which I understand, right, compared to
Speaker 3: previous years, it's you know, a little bit, you know,
Speaker 3: sort of slower. However, I think you know, you need
Speaker 3: to look at the relative ranking and for the rest
Speaker 3: of the world. You know, the last two years have
Speaker 3: not been a particularly conducive year of IPO activities, but
Speaker 3: you know, I think we've reached a pivot point and
Speaker 3: I'm certainly seeing momentum pickup.
Speaker 2: So if there's not a deliverable on these other initiatives,
Speaker 2: including what reads was announced earlier this year in April,
Speaker 2: we don't have a date for the beginning of that
Speaker 2: inclusion into the So.
Speaker 3: A lot of enhancements have been announced as you know.
Speaker 3: So besides read Way, we also have we also have
Speaker 3: self bound R and B counter which is in the works.
Speaker 3: And like I said earlier, with all those you need
Speaker 3: to make sure that the plumbing works, and we're working
Speaker 3: together with our friends on the mainland to make sure
Speaker 3: that you know, all the system upgrades, all the infrastructure
Speaker 3: are built in in a way which you will make
Speaker 3: sure that the rollout is very, very smooth.
Speaker 2: Last November we also got an announcement that there would
Speaker 2: be trading in treasury bond futures. We don't have any
Speaker 2: start data that as well. Do you have any update
Speaker 2: for it?
Speaker 3: Well, I don't you know, Okay, I'll give you the
Speaker 3: same answer. Right. We have been working on the technical
Speaker 3: aspects to make sure that you know, the rollout will
Speaker 3: be smooth, and I don't worry about sort of not
Speaker 3: having a date because as you can see right, you know,
Speaker 3: recently we've seen a lot of measures being announced by
Speaker 3: Beijing and all that have a very huge impact in
Speaker 3: the market. Right you saw the rally and early October,
Speaker 3: end of September, early October, and therefore I really don't
Speaker 3: worry about, you know, seeing all these positive momentum build up.
Speaker 3: In fact, you know, we just need to make sure
Speaker 3: that you know, there is a way to be ready
Speaker 3: for it, and not just being technical ready. The market
Speaker 3: also needs to be ready for it.
Speaker 2: I had to ask you what do you think is
Speaker 2: going to be the Trump effect on the Chinese economy
Speaker 2: and how that equates to capital raising, potential action against
Speaker 2: China and the dampening effect possibly on the market here.
Speaker 3: Okay, I know that question will come now to me.
Speaker 3: What we saw is that the week leading to the
Speaker 3: US presidential election and the training volume actually is softened
Speaker 3: a little bit in our market. But as soon as
Speaker 3: the election is over, we saw the volume got back
Speaker 3: up again. So I think, you know, with the presidential
Speaker 3: elections now behind us, there is now sort of the
Speaker 3: market knows how to move on, which is a good
Speaker 3: thing to me. You know, this is not the first
Speaker 3: time US has Trump is the president. We've gone through that.
Speaker 3: What our market has continued to prove is that, you know,
Speaker 3: whatever the conditions are, we have that resilience to make
Speaker 3: sure that we can write the tide.
Speaker 1: That was h k e X CEO Bonnie Chan speaking
Speaker 1: with Bloomberg's Steven Engel.