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Hong Kong Exchanges and Clearing (HKXCY): Company Profile, Stock Price, News, Rankings

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Hong Kong Exchanges and Clearing | Fortune

Hong Kong Exchanges and Clearing (HKXCY): Company Profile, Stock Price, News, Rankings | Fortune

Bonnie Y Chan, Chief Executive Officer, Hong Kong Exchanges And Clearing Limited In Conversation With Clay Chandler, Fortune

Innovation Forum 2024: Hong Kong’s Next Chapter

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Well, it is uh a real honor to have uh Bonnie Chen uh with us uh here this morning. Um Really delighted that you agree to make time for us. Bonnie uh Among her many uh distinctions is uh as, as Joe mentioned, the first female CEO uh of the uh Hong Kong uh exchange, I think that's worth applauding. Um And she's really uh extraordinary because she brings both legal knowledge and uh a breadth of knowledge as an operator of the actual exchange itself, the nuts and bolts, the technology, all of that, she's been deeply immersed in it at her role uh at the exchange to date. So um I want to start if I can just picking up on your, you know, being the first woman to run the exchange on this question of gender diversity uh at, at companies that trade on the exchange in Hong Kong. And I know this came up in the breakfast this morning, the most powerful women's breakfast. But since uh for the benefit of the men who weren't in that audience, I'd like to talk about that a little bit more. Now, there are something like 20,600 companies or so on the Hong Kong Exchange, as I understand it, about 500 of them. Tell me if my numbers are wrong are all male boards that the percentage of female directors on those companies is still somewhere around 16 17% compared to uh markets like uh you know, New York and London where it's over 30%. And even in Asia, I was reading that even Malaysia has a higher percentage than, than, than that, which is interesting. Um Can you, and you've been very actively involved in trying to uh bring Hong Kong up to global standards? And I wonder if you could talk a little bit about that, why you think it's important and, and what you're doing to change it? Thank you Clay. Very happy to answer that question. So, first of all, I don't think I need to talk about the benefits of diversity. I think by now it's well understood, you know, by all the men and women in this room. So let's talk about our journey in terms of advocating uh and uh bringing more favorable conditions uh to allow a higher participation by women on the boards of companies listed on our exchange. So like you said, we have 2600 you know, plus companies uh on our exchange at the moment, the journey actually started many years ago uh in 2019. Uh that was the year when we first made it a requirement for all the listed companies on our exchange to have a board diversity policy because it's always about, you know, tone from the top, you need to the board to start thinking about the issue before changes uh can happen. Uh And we looked at it, um, we didn't like the results because it was, you know, to be honest, a little too slow. Uh, in 2020 when we review the number of uh female directors on our uh on, on the boards of all the listed company, the percentage was at 14.6 which is a low number compared to, you know, like you mentioned in a lot of other markets, we are talking already 30% and above. So we discuss internally what can we do right to make a real difference and really uh uh you know, uh turn it out. Uh And we took a very unusual step, I would say uh many markets have their own ways of doing it. Um We became the first international exchange to actually make it a mandatory requirement to end single gender boards. And that was a rule we introduced in 2022. Um and we put together a grace period. Uh which means by the end of this year, 2024 all listed companies on our exchange uh must not have a single gender board. Now, when we introduced that rule, uh the number was standing at around 808 100 companies still with a single gender board that was about a year ago. Um By now, the number is slightly below 500 still still 500 more to go. But we are, we are hopeful because uh the, the A GM season is coming up. So usually that's the time around uh April and May is when um listed companies appoint new directors to their board. So hopefully by the end of this A GMC, we're going to uh see all companies on our exchange uh being compliant with the requirement. Now, we still have to think about how to punish those who remain non compliant by the end of the year. But that's a different topic. So we, we, you know, happy with the progress which has been made. What we really want to accomplish is um I would say this is really just a catalyst. I think once um companies start bringing more diversity into their boards, they will begin to realize the benefits of doing so and once they have done it, uh they, the benefits, that's when regulation actually can take, you know, a step back and, and let you know companies and, and board directors um do their their own journey. You haven't made any decisions yet about whether there will be financial panel or, I mean, you're not thinking of king these companies off the, off the exchange or anything like that. Well, we, no, I I think for a start, there will be some naming and shaming, that's important. I also think investors have a role to play because, you know, we we now uh obviously we are in dialogue with a lot of the stewardship, you know, around the world and investment funds and all that and, and you know, in the investment policy, they are now very focused on uh indicators such as diversity, right, that will dictate how they want to deploy capital. So I think while, you know, we can impose a rule, um companies will very quickly realize that, you know, they, they, they have to get on to the journey. Hm. Um ju just one more question quickly on this. Um I've asked a lot of people who are on the boards of companies to trade on the exchange, you know, why, why are you not in compliance, what's going on? And I hear a variety of different explanations and I, you know, sometimes people say, oh, well, it's a cultural difference. You can't really, you know, compare us to London or, or New York. And then some people say, well, it's because state owned enterprises and that's a different, you know, kind of mode for appointing directors at, at, at state owned enterprises. And then the other one I hear which I find really just incredi incredible and infuriating is, oh, we can't find good talent right? There are not enough uh qualified women to be on boards. Oh, we tried so hard. We couldn't find one. Do you do any of those explanations? Make sense to you? Uh Not really. I think they just need to look harder. Right. In the case of Hkex, we are a listed company. Um, we have 13 members on the board and you know, among the 13 of them, five are women. I don't think there was any difficulty in terms of identifying qualified women uh, to be on the boat. And actually to this comment, I always remind people, it's not, it's not AAA one way, you know, thing, it's a two way thing, right? So while companies may think that, oh, you know, there are no, no qualified women uh to sit on my board, they need to also realize that the women, you know, who are looking for directorships, they also have a choice. I mean, they are doing their own due diligence, they want to only join boards that they think it's worthwhile their time to do it, right? So maybe when these companies express AAA, you know, a thought that they are having difficulty recruiting women, they should really uh maybe do some, some self reflection, well said, well said, um so let's talk about the, the exchange in the markets a little bit if we can. Uh and I wanna be the first to stipulate that uh you know, I recognize that just because you're the boss of the exchange now doesn't mean that you control macroeconomics or geopolitics and you can't really determine whether the markets go up or whether they go down. But you're coming in at a very tough time. What was already a big, big job? I mean, just looking at some of the numbers of the hans and, you know, the end of last year had a 13 year low. The stocks have plunged for four years straight. Hpkex profits down almost 30% last year. The share price down 18% and we can talk a little bit about the IP pipeline and the difficulties there. But it's uh I guess one way of looking at it is saying, you know, you're coming in at the bottom of the market. But is it, I don't know, tell us what you expect for 2024 in terms of market. Well, I won't be able to tell you whether we have or not, but I would say, I think you're absolutely correct. There are a lot of challenges in front of us, but at the same time, I see even more opportunities. Ok. So why do I say that now if we take a very short time horizon? Yes, indeed. The last few years have been very challenging uh capital markets, especially in this interest rate environment, um struggles and it's not, I mean, it's a global phenomena. Uh Hong Kong is no exception. However, if one were to take a longer term view, uh I, I really see a lot of opportunities because at the end of the day, obviously in Hong Kong and for HKX, uh we always take pride in the fact that we are super connector. And when we say being you know, a superconductor, what are we exactly connecting you go to the very basics of an exchange is connecting capital with opportunities. So whoever has the money with the, whoever needs the money, right? You match them. And in the case of Hkex, we are very uniquely positioned because we are also a superconductor between China and the world. And so um if you were to take a longer term horizon uh in assessing this um you know, situation, I personally feel that, you know, we're still seeing a lot of growth coming out of China. Um you know, the latest uh uh forecast from the two sessions is that 5% for this year, you know, for an economy, which is the second largest in the world, that's a huge number, that's a huge number. And what is, you know, if you think about this 5% it's about, I mean, you're talking about a lot of companies which are still, you know, growing, right? I was listening very carefully to the previous few panels, whether they are talking about A I or other types of innovation. You know, there are just so many exciting companies uh still trying to um you know, figure out new products come up with new inventions and this will be a very strong supply of issuers down the road on the investor side. Uh I would say that the world is still very underweight in China. So if you think about foreign investors holding in um the Asia market at the moment, it's only about less than 5% of total market cap. I mean, compare that with Japan, for example, which is the third largest economy in the world, foreign investor holding is above 30%. Ok. So you know, I'll leave you guys with a thought. Um whether you believe the, you know, global investors are going to continue to keep their investment in China and the allocation of capital at a below 5% or they're going to eventually see the potential, see the growth in China and increase the allocation. Let me ask you quickly about what's happening with IP OS again, you know, last year tough for IP OS uh about 70 IP OS in Hong Kong, but the kind of uh net funds raised something like $5.7 billion. That's way down from previous years. Uh You dropped to Hong Kong dropped to about uh I think it's the eighth or ninth in the sixth in the global League table. Uh uh down from, you know, number one as recently as 2019. Um So what's um and uh you know, a little bit discouraging that we saw San uh kind of bail out of its plans for an IP O A lot of companies that would like to go public. Don't feel like they can do it in this market. Uh Are we going to have a better year this year? Do you think in the IP O? OK. To answer that question, you know, let's think about why the IP O market has been um somewhat muted in the last couple of years. Um Obviously, macroeconomic conditions, uh geopolitics have something to do with it. Uh interest rate environment also played a part uh what we have seen and you mentioned the figures of 73 is the total number of IP OS that was completed in Hong Kong last year in 2023 compared to 90 in 2022. Now. So in terms of the number of IP OS, the drop is not not that significant. However, fundraise like you said, has dropped two thirds compared uh if you compare 2023 to 2022. And it's understandable because, you know, we all know that uh valuations have come down quite significantly and this is a global phenomenon. So when you talk to entrepreneurs, I think a lot of them are still very keen to do the IP O and provide that exit venue for the pre IP O investors. However, they just don't want to sell their stock cheaply, right? So what we saw last year was uh in a lot of cases, companies still going ahead with their listing, but you know, they try to do a smaller IP O and uh hope, you know, they, they're just waiting for the right conditions to arrive and then they can do the follow on offering. And in the case of Hong Kong is pretty simple, you just do an overnight block trade. Now, if we sort of look at it in a broader context, and you mentioned the fact that, you know, we have dropped a few notches, you know, in the um uh globalized po league tables, what we have seen in the last couple of years is also a phenomena whereby a lot of companies around the world, they have chosen to live in the domestic market. Now, I don't know whether this is because of nationalism maybe or uh COVID actually had a part to play because, you know, I mean, traveling wasn't that easy. So uh that's why the league table in the last two years, you see a few uh especially Asian exchanges emerging and taking the the top few spots. However, as these companies continue to grow, uh they may reach a point where they, they have a need to tap deeper markets. Um And they may actually find that their domestic markets may not be able to uh support their fundraising needs. And that's when they may look to other global exchanges to do their, their second listing or their dual primary listing. And that's why we're investing a lot of time and energy uh to plant the seeds. Um You've seen that we, over the last year or two, we've signed a lot of mo us with, you know, uh quite a number of exchanges both in Southeast Asia and the Middle East. Um We have open offices in uh London as well as New York. We already have a uh an office in Singapore and, and this is really to set the stage and we are actively talking to a lot of issuers around the world would believe when um market conditions are more favorable, we should be quite well positioned to capture them. You've had some success with that so far, Prada. Um The what for the yacht maker? Um uh to name a few, but you're looking for uh a, a much bigger contingent of, of uh non Chinese for firms to come in the list. Yes, absolutely. And, and uh I think the last wave of international companies which came to Hong Kong, a lot of them are brand name companies, consumer, consumer space. Uh What we're very focused on. Uh it's really attracting the new economy companies we have already over the last few years, uh made significant improvements in our listing regime so that pre revenue, pre profit companies like the biotech space and the specialist technology space can achieve a list listing in Hong Kong. Um We believe that and we have seen a proliferation of these companies around the world, right? And these will all make very, very interesting candidates down the road. Um you know, to, uh you know, as IP O candidates. So we're very, very focused on, um speaking to them. That's really uh fascinating. I we'll have to leave it there. But uh I wanna wish you every success as you begin this new endeavor. I know there are a lot of people in the city who feel that they have a, a vested interest in that success and are wishing you uh very well. So we'll see how the year of the dragon uh continues to unfold. But thank you so much, Bonnie Chan for uh joining us. Thank you.

Laura Cha, Chairman, Hong Kong Exchanges and Clearing Joey Wat, Chief Executive Officer, Yum China In conversation with: Clay Chandler, FORTUNE

Fortune Global Forum 2023: China’s Next Phase Of Growth 

All right, we're going to get ready now for the for the next session after decades of GDP growth above 9% a year. The world's second largest economy is finding itself amidst a flurry of unexpected challenges. China's economy is in some ways faltering due to fact that include many things, a real estate crisis, declining consumer confidence as well. There's an aging population factor, the knock on effects of the zero COVID policy as well and a decrease in trade and foreign investment. So, so many challenges for that economy and the idea, you'll remember by some economists that China would surpass the United States to become the world's leading economy is now in question in a way that it wasn't maybe a few years ago. Um And, and this is a concern for the global economy because will this have a knock on effect for everyone else? We are going to hear from business leaders today who operate inside of China on what they are doing to manage these economic headwinds and what they're doing uh to stay resilient as well. And we'll listen for insights that they can offer all of you international executives on the best ways of doing business in China right now. Uh both uh rank on this year's list of fortune's most powerful women in business. They are Laura Cha. She's the Chairman of Hong Kong Exchanges and clearing a powerhouse in the world of Financial Exchanges that operates an extensive portfolio of markets, equities, commodities and currencies. Joey Watt is chief executive of Yum China and of note, Yum China ranks on fortune 2023 change of the world list, which looks at companies that have achieved measurable, sustainable social impact as part of their profit making activities. Laura and Joey Joey join Fortunes Clay Chandler. Please welcome them, please. Thank you. Thanks. He um I have been looking forward to this uh panel uh all day. These really are two amazing power women and uh we feel very fortunate to have them with us in our strategy session about China this morning, we talked a little bit about some of the challenges that ha I just mentioned, but we also spend a little bit of time talking about investor sentiment and how fickle it can be. We noted the boom and bust and global investment sentiment about China this year. And uh for those of you that don't know, I mean, in January, we saw a huge run up in investment uh in China stocks and bonds as people expected that the Chinese economy would come roaring back from the pandemic that there would be a lot of pent up consumer demand. And uh that's not really how things played out what happened instead was that we had a gradual recovery. We had a lot of positive expression of uh kind of economic policy and, and a kind of pro market uh uh changes from uh China's planners and policymakers, but investors weren't really convinced. And uh so, uh you know, 10 months or so into uh into the year, a lot of that investment money that, that piled in has uh has just exited China stocks and bonds again. And so I think there's a little bit of a question which I want to us today about why that is, is it that China's economy is weak and faltering? Is it that investor perceptions are overly bullish or is it, is it some combination of the two? Um and I want to start Joey maybe with you because you're right on the front lines of this. Um Yum China is a fantastic company. It operates uh KFC and Pizza Hut and Taco Bell and other fast food brands. It has one of China's largest networks of stores. You've got, I think about 9000. Is that right? KF CS? We are celebrating 10,000 KFC December 15th. That's next month. Yeah. And 14,000 plus stores altogether in something like almost 2000 Chinese cities. Yeah. So you've really got your finger on the pulse of, of Chinese consumption and consumers. You're right there on the front lines but this year has been an interesting one for you because you had a pretty good year last year, given that the COVID restrictions were still in place. And this year your profits and your revenues are, are up. You added something like six or 700 stores this year I saw. So you're, you're definitely growing and expanding. Uh And then I, I just noticed in the third quarter, yyy, you know, you said, well, sales were not, were a little softer than you thought that they would be and your stock price dropped 15% in a single day and it's now down to about 20% I think uh uh year to date. Uh And so I hope you can explain that a little bit. Um Is it that consumer sentiment is weak or is it that investor sentiment is weak? What's going on? Maybe a little bit of both? Um Well, you know, China went through three year, it was tough in whatever way, including uh you know, consideration for the consumer. So it just takes a little bit more time. Um Not to forget during three years. Uh people don't get much sort of subsidies in financial terms from so not like the United States. So in the process, we can understand people become rather cautious and rational with the spending and you learn to live your life without much luxury for three years. Um So, you know, as a result, the consumer behavior, I will call it become more rational in terms of their spending, uh which we can understand. Uh But at the same time, some pattern change, for example, over the weekend people stay at home more. Um because, you know, they're still coming out particularly for older people. So that's, that's one thing happening. At the same time, the expectation is very different because um for, for people outside China, the open up happened much earlier. Um you know, November 14 means nothing to most people in the world, but means the world to people in China. That's the first day China opened up in Hebei. And last year right now in Shanghai, we were still in time. It's not that long, but the expectation is that everything honky dory. So there's a bit of mismatch and as a result, I would say that's a bit of um perception or understanding still take a bit of time to, to uh you know, to just to let it happen and then come back to my company as an example because I can't really comment on the whole economy. I only can, can look at economy from chicken, selling fried chicken. So, so um at the best I call it chicken, economic or economic. Um so from selling fried chicken, uh what happened is we report, well, actually, it's reported by multiple media that uh quarter three, last quarter, we ourselves grew by 9% in reporting currency. But in reality, we grew ourselves by 15% in Renminbi. But because of currency, that's mismatch and that 6% make a break in terms of meeting expectation or not. But the headline misunderstanding, which is a term that they used this morning, I think it's brilliant way to describe. There's a lot of headline misunderstanding. People just look at the headline without going into the detail. That's one thing sort of happening everywhere. Um And then the Chinese economy is growing at whatever number you call it 4% 5% let's say assuming is growing at 5%. What does that mean? China economy is at 1718 trillion right now, 5% means 800 to 900 billion. What does that mean? It means two Vietnam a year. So in in absolute terms, so as a business operator myself, when we are opening stores in in China, why do I have to go that far? I mean, it's happening right here. And by the way, what bring it all together is while there's still so much opportunity for consumer product industry, the economy years is growing only at three or 4 5% whatever number is restaurant industry we've been growing at double digit, high, double digit this year. And as a result in reality, we achieve record sales, record profit this year. Um And in terms of new store opening, actually, this year, we're gonna smash about 14,000 stores. So we at the end of today, after today I have a few more stores in our portfolio. That's the speed that we are talking about. And we are not the only ones in our industry, the big M and then many other brands in shoes, in electronic, they're all expanding very aggressively. So while on the one hand, you have the perception or misperception, whatever call it. On the other hand, people are voting still with the money with the wallets. You know, this is really fascinating and it does sort of speak to this question of whether perhaps what there is, is a, is a kind of misperception on the part of global uh uh investors. I mean, it strikes me that your sector in particular and where you're positioned in the market, investors should be looking a little bit more sophisticated in a more sophisticated way at the types of different companies. I mean, maybe luxury companies are, are are struggling or having a harder time, maybe the housing sector is struggling. But you're in a that, you know, even during a time when people are thinking more carefully about how they spend their money, um you know, uh you might actually benefit from that kind of uh uh uh you know, people maybe are not going to a fancy super expensive restaurant but they're happy to go to a KFC or, or a pizza hut. Yeah, that that's happening. But at the same time, Chinese consumers are becoming more rational in the sense that they want the price but also good product, not just one, they want both and we have to continue to and we are in that position, but also we work very hard for it. It does not just happen that way for three years pandemic, we deliver profit over 12 quarters nonstop. Um And I, I truly believe that whatever industry we are or whatever sector, what define a company is not only where you are but what, what have we done in the last few years? And I truly believe all the great company are the Children of the long term. Huh? Great companies that Children in the long winter. Ok, then. Oh, I wanna come back to that. It's a really interesting uh uh sentiment. Laura, let's turn to you for a moment. I mean, the the the Conduit for a lot of this investment, a big conduit has been the Hong Kong Exchange. And uh one of the things that really impresses me about the exchange is how um uh aggressively you've worked to expand the Connect program and to make it easier for global investors, to invest in, in China stocks and to make it easier for Chinese investors to invest in global stocks. Um Talk to us a little bit about connect because maybe people here may not be familiar with it and how it's how it's expanded over the last few years. Yeah. Thank you, Clay. Um the Connect program, what we call the Hong Kong Shanghai connect and the Hong Kong Sump connect uh our flagship product in terms of connecting China with the world and Shanghai. Uh Hong Kong connect was set up in 2014. So it's been now 89 years and it's been proven extremely successful. What the program is is that investors retail investors on the Chinese domestic market, they have investor accounts, they can buy Hong Kong shares through this mechanism and then the same for Hong Kong investors, they can buy a shares on the Chinese Exchange without having to go through the the process. So if you are in the Connect program, uh you have actually been able Chinese investor in international and Hong Kong company and vice versa. And then we expanded it to uh the Sum Exchange as well. This year, we have a breakthrough in the sense that international companies that are that have a primary listing in Hong Kong will be admitted into that Connect program. That means for example, a Middle East com companies if they come to list in Hong Kong, not only are you able to assess the Hong Kong investors and global investors but also the Chinese investors, the Chinese retail market uh in the stock market has 206 million accounts. So you know those are real name accounts. There's not, you know they they're not allowing a fake names. So there's a huge pool of capital that can be accessible by foreign investors. So this is a very important aspect and you know, China has the highest saving rate in the world. So we calculated that not just we but the public data is that uh they are untapped capital of $30 trillion in the population of China. They are looking for a way to go out to invest in good companies. And Hong Kong is the perfect conduit. And now you know, we are not only in terms of equity, but we also have bond connect, swap connect, which is a derivative ETF connect. So we are expanding that, that, that that portfolio offering so that investors can take advantage of this very unique uh program in Hong Kong. So you know, you can go both ways the capital. So not just the opportunities for the number of ways that uh investors can invest in uh in equities but also uh bonds debt now and then the different ways that they can invest in equities uh which is, which is extremely sophisticated. I mean, I cover the and, and watch the exchange pretty closely. It's, it's one of the most sophisticated financial operations in the world. And it's been quite entrepreneurial in finding ways to uh you know, put itself at the center uh of these two markets that have in many ways, different economic uh systems. Um I wonder if you could talk a little bit about uh the, the the geopolitics of that because you know Hong Kong's strength has always been that it is this connector. It's got a kind of foot in one market. It's got a foot in the west and that's always, you know, been. It's, it's, it's genius and its virtue um that becomes a very tricky position to be in the little though when the two biggest economies in the world are suddenly uh uh at loggerheads as increasingly they seem to, to be. Um are you finding uh you know that people are reluctant to come and trade in Hong Kong to do business in Hong Kong? That that's somehow inhibiting Hong Kong's ability to fulfill its its mission as being this unique uh connector when when uh geopolitical tensions are the way they are, I think um the geopolitical tension affects everyone and affects a lot of markets. And Hong Kong is no exception in exchange, as you said, we are in the center of it. But if we step back and look at the two factors, one is what has made Hong Kong great as an international center. You know, we have those factors have not changed. For example, the transparency, the rule of law, low tax regime, a you know, a a large pool of professionals um and where our rules are clear and transparent, we have no administrative interference in the market. These are the factors that have given investor confidence to invest in our market, global investors to come, none of that has changed. And then we look at the other side which you know, ok, the China factors China as someone has said earlier, it is the second largest economy in the world, 80 trillion $18 trillion us dollars of GDP, which is four times that of Japan, six times of India, six times of ASEAN country and 10 times of South Korea. So it is also the largest trading partner of 100 and 40 countries in the world. So these factors, yes, they are affected by geopolitical tension now and there, here and there and to some degree more, some degree less. But these are the hard factors that you cannot ignore. So China plays a very important role going forward and going forward in the global economic scenario. So we have to look at those factors are also in the long term, they haven't changed. So if you look at the two fundamentals, they change Hong Kong on one side and China's supply, those are what will keep on keep us growing. But we're not only looking at China, we have been in this part of the world a few times this year already. We are um looking to diversify our investor base, our source of capital, our po possibility of listed um issuer. So we are also trying to be as international as we can to keep that um navigate, as we say, we have to navigate very carefully in these circumstances. We've got just a couple of minutes left. I want, maybe just with one minute for each of you ask, you know, come back to Joey's observation that, that strong Children are the survivors of, of, uh, long cold winters. So, we're in a little bit of a winter period right now. Uh, I'd love you to both kind of look forward a little bit and give me your quick take on. How long, how much longer do you think winter lasts? Um, I don't know, nor does it matter. Um As long as we stay agile, it's winter or summer, whatever weather will do. Well, um in the short term might be challenging. Uh But here's the final number for, for my optimism we can see in China for 36 years, we have only served about one third of total Chinese population only. And right now, 10,000 stores in China. What does that mean? KFC Global have 29,000 store in 150 countries and 10,000 is in China. That's where the the the the growth has been and it will be continue and not to mention the brand as well. So we can't afford to ignore a market of that size under any circumstances. Laura, what's your, what's your view? I think for the capital market as a whole and for Hong Kong, in particular for Hong Kong exchange, the area of growth that we see coming out of China, uh the green economy and the digital economy um in sustainable finance and sustainability. You know, in terms of decarbonization, China is really leading the way in terms of wind, renewable, etcetera. And the next thing will be the improvement, enhancement of those technologies to make renewable much more accessible. And China has been doing that more than many other countries. The ev number, the electrical vehicle, the batteries and the wind turbine and the solar uh solar uh panel. Uh they are the top producer in the world. What we need next is breakthrough to make it more accessible, cheaper for the entire population and outside. And then the other thing is the digital economy. We see the innovation there that's driving and the green economy plus the digital economy itself at 5% to the GDP growth. So we see very strongly. The trend coming is, you know, technology A I um sustainable finance, etcetera. These are the driver and that will look to new capital and Hong Kong could be the place to help raise them. Fascinating. Um I'm afraid that's all the time we have, but thank you so much for your views uh on the world's second largest economy and Hong Kong's role in facilitating its continued growth. Uh Please uh join me in giving a warm welcome to our, our uh our panelists. Thank you very much.

Laura Cha, Chairman, Hong Kong Exchanges and Clearing Limited; Non-executive Chairman, The Hongkong and Shanghai Banking Corporation
Interviewer: Claire Zillman, FORTUNE

MPW Summit 2020: Inside The Pandemic-Era Boardroom

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Lessons on corporate governance in a time of uncertainty.

Hi Laura, thank you so much for joining us. That's an M. P. W. Summit. We're so happy to have you. Thank you Claire for having me. Great. Um I just want to jump right in. Um I think everywhere has really had, its an under statement to say it's an extraordinary year, but Hong kong especially has not only experienced the coronavirus but has also dealt with months of um protest and then this new national security law that went into place just a few months ago, all of that news has really prompted people to question the future of Hong kong as this bridge between the east and the west. How do you see the future of the city taking shape and especially as it relates to the market. First of all, I think there are peoples of course have questions about all the, all the events that have taken place and like everybody else, we are trying to weather it. We're trying to go through it as as well as we can. It is no question, a difficult situation for Hong kong. We have to navigate between the east and the best. And uh we do uh see that we will continue to play a very important role, especially in the current tension between the US and china Hong kong remain in excellent connector. Our role has not changed. Um People may have question and I think those questions are being answered. But by and large, our market is solid are fundamentally. We are an attractive market, operationally. We're resilient, We are stable, were steady and that's why we continue to attract investors to our market. Right? When you think that those questions are being answered, how would how would you characterize the answers that you're getting? Are they positive? Are they, are they certain or are there a lot of unknown still out there? Well, there's there are a certain amount of unknown, There are certain amount of um doubts and I think it is natural as time passes and we will see you know this as method developed, I will remain confident that Hong kong uh will continue to be resilient and we will be back on our feet. In fact, we have, you know, if we look at the financial market, we have been pretty stable. Right right. One of the interesting trends that's really marked the Hong kong market recently. Um are these secondary listings of U. S. Listed chinese firms that are now turning to Hong kong? Um A lot of analysts see that as these companies sort of buying an insurance policy against the escalating tensions between china and the US. How do you see that trend? I think first and foremost we have been an attractive market. As I said, we have been the number one globally in terms of I. P. O. Fund seven years out of the 11 years in the in the lab in the past. So fundamentally we are strong enough to attract these listings. The secondary listings we see as a natural phenomenon, particularly during the U. S. China attention, whether people are looking for an insurance policy or people are rethinking about a prefer place for listing. We, what we can do in Hong kong is to make ourselves as clear transparent so the investor continue to have the confidence. The issue will see that we are a liquid market where the rules are clear and fair. I think those are the fundamentals that we have always appealed by and we haven't changed. So whether that's going to be a trend or will continue to be the case, I think I'm quite confident that it will turn into not just a short term trend but a long term phenomenon. Right. Well, I was gonna ask if you see it, if you see it outlasting the current sort of height of the, of the U. S. China attention. Perhaps after november, there's a new administration and it takes a different approach to um relationship with. How do you think that could shape the trend of the secondary listings? I have always been of the view that the issuers would choose where the market that makes the most sense to them, where they can raise the most capital, where they can reach the, reach the most investors. So in that regard after the election, perhaps people who might have different views, but perhaps they will not. And what we can do in the Hong kong at the hk hK X is to continue to make our market strong and vibrant and attractive to the others. Right, Right. When we talk about the tension between Washington and Beijing, there's a lot of national companies that do business in both markets. Um HSB the company, the bank that before you sit on it is one of the companies have sort of been most tightly caught between that tension and there's a lot of other companies. Of course, there's a Tic tac saga going on. It seems like a really difficult, if not impossible situation to put these, these companies. And how do you, how do you see it clear? You're absolutely right. It is extremely difficult in the current circumstances. And the companies that are doing this, this both in china and the US um have to navigate very carefully. And um, I think the uncertainty create a great deal of anxiety on the part of the company and on the part of the shareholders or the part of the management and we are doing the best we can, I think, uh not only in HSBc, but in HK X as well. Um were there are listed companies that, you know, that might be uh sanctioned and we have encountered those situations before and we've been able to handle that uh for the companies themselves, there's no question one has to tread very, very carefully right. Um one reason that you're sort of a fascinating figure to me is because you sit on board not just at eight the next in Asia, but then in europe as well. So you really had a global view of the last few months, um especially as it relates to corporate governance. Um, I'm curious, obviously the meetings themselves are taking place differently. A lot of it's happening virtually, but I'm wondering if the substance of the meetings are having on these two continents have changed as well as the world's or grapples with this once in a generation crisis, what how the conversation shifted if at all? I think first and foremost all the companies that whose sports I sit on the first concern is really the health and well being of the staff of the employees. Uh no question whether in asia or in europe, when the pandemic happens, you know, you know, the short term where we go into split team lockdown work from home etcetera. First and foremost, concern is really understand, I see that in every company that I sit on then, you know, beyond that um Unilever is unique in the sense that sustainability is already part of this agenda, so that is a continuous discussion on that. HSBC has always been one of the forefront in terms of financial institution paying attention to. Uh huh. Yes, the area H K X. We have heightened our role. We have three different roles in terms of the sustainability. Yes, she community, you know, we are regulator, we can stipulate rules, we are listed company ourselves, we champion these principles and we practice them and we facilitate, you know, we set up a green exchange so that people have a single portal where they can get information on the S. G. So different companies are reacting to the crisis. I think many, I see many companies already uh discussion on the subject. The pandemic brought these what the subject to the forefront governance as well, so it's just different act. Yeah. Right. I'm sorry. So the so the refocus on or or a heightened focus on E. S. G. Is one of the results that you've really seen from from this crisis. Yeah. Okay, great. Um Laura I think we have to leave it there. I'm I'm so thankful that you are able to join us and give us um this global perspective on the current current state of the world, especially when it comes to finance on the market. And thank you so much for joining us. Yeah. Thank you, Claire. Thank you.

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