“When capital is coming out, I challenge you, Hong Kong is not ready for that. We are racing against the clock,” says Charles Li, chief executive of the territory’s bourse
January 16, 2014 Leave a comment
Jan 13, 2014
Hong Kong Needs to Lift its Game, Says Li
Hong Kong needs to deepen its capital markets beyond equities and target growth in areas including fixed income, currencies and commodities if the city is to retain its status as a leading financial center, according to Charles Li, chief executive of the territory’s bourse.
The stark warning comes as Hong Kong faces growing competition as a gateway for capital into China from rival financial center Singapore and as Shanghai seeks to develop into a financial hub.
Mr. Li, the chief executive of Hong Kong Exchanges & Clearing Ltd.0388.HK -0.39%, said the former British colony served Chinese corporates seeking global investors but isn’t ready to capture Chinese capital exiting the country.
“When capital is coming out, I challenge you, Hong Kong is not ready for that,” Mr. Li told a conference here. His remarks were met by applause from the audience. “We are racing against the clock.”
In particular, the CEO said that as Beijing liberalizes the financial system and loosens its grip on interest rates and the tightly controlled yuan, Chinese corporates will need a marketplace for hedging their exposures through derivatives and other similar products.
“We need to be the destination of that capital in terms of fixed income, currencies, derivatives, commodities,” Mr. Li said.
Since taking over as CEO of the territory’s bourse, Mr. Li has flagged ambitious plans to broaden into new areas. He made a bold bet in 2012, buying the London Metal Exchange for around $2 billion, a move that is expected to boost earnings through 2014, analysts at UBS say.
The exchange, known as HK Ex, has made a strong start to the year by attracting a string of high profile new share offerings, which could put the city on track to regain the top spot for listings anywhere in the world, a title it last held from 2009 through 2011.
That will help relieve some pressure on Mr. Li after Chinese ecommerce giant Alibaba threatened in 2013 to list in New York in protest at Hong Kong regulations blocking its proposed board structure.
But Hong Kong’s ambitions will need to be in tandem with China, and any hint that the territory could rival China’s own development will be frowned upon, Mr. Li said.
“China is like a big ball that is exploding, we should be on the edge. We should only do the things they can’t do without us and as soon as they can do it we should return it and do the next thing they can’t do,” he said.
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