Good to see you, buddy.
See you. Always good to see you.
Always good to see you. And we'll see you up in in China as well
as in Dalian at the World Economic Forum.
Hello, everybody. Everybody get something to eat, I hope.
Bonnie. You know, it's not to hit you hard right
off the bat, but it's been a kind of a tough run for the Chinese economy and
Hong Kong stocks. They've since you took over in March,
though, as CEO, it's up about 11%. The Hang Seng index.
It's all because of you. It's all because of me, I'm sure.
So obviously, you cannot control the pace of growth in the Chinese economy.
You cannot dictate Chinese government policy.
And you definitely have don't have your finger on the pulse of geopolitics right
now. But what is your utmost priority to
return confidence to HK and the Hong Kong Stock Exchange?
Right. I think actually you describe it very
well. There are a lot of things that I cannot
control, but I can get myself and HK ready for the opportunities which are to
come. So today I counted.
It's my 97th day as CEO. You know, by Sunday it will be my I'll
be celebrating my hundred days as CEO together with my Dragon Boat team and
Sandy. But anyways, what I would like to say is
this I think what we are observing is in fact
a lot of changing orders globally and that added to the fact that added to
this phenomena you just mentioned, which is the fact that there are so many
things we cannot control geopolitically. Things are obviously changing a lot the
way, you know, capital was formed these days and this has a lot to do with what
we are observing in the IPO markets. That's also changed significantly in the
last few days of a few years. Technological innovation and the area
that we are most relevant to in the exchange business, that has also
significantly changed. And of course, a lot of you are aware
that earlier, you know, just a few days ago, the US market has turned to a two
plus one settlement, right? So that's one manifestation of this kind
of technological enhancements that, you know, exchanges need to continue and
continuously work on to match the needs of clients and investors around the
world. And last but not least, financial
markets in general. That's a big sort of set of changes as
well. So nowadays this exchange operators, we
don't only compete with fellow exchanges, we compete with a very new
set of competitors, including big techs, digital natives, etc..
Right. So as I became CEO, I was sort of
thinking to myself, what should I do? What should I focus on?
And therefore one of the first thing I publish as a block this is probably
about two months ago I gave it a title, Redefining Resilience, and I think that
is critical for exchange operators is to make sure that we can really handle all
these operate, continue our operations amidst all these changes.
And you know, as part of that block, I also announced that we are investing
very big into technology. So we are going to embark on a very
exciting journey, building our own derivative platform.
This is called the Orion Derivative platform.
This will be a multiple year exercise, but that's one example of the kind of
things that I'm most focus on. I do think that, you know, the long term
promise is good and therefore we need to get ourselves ready.
Yeah, yeah. The proximity to China, you've always
been talking about that, obviously. And it is an advantage.
It's an advantage. So sorry to bring you into the Bloomberg
terminal, but we're going to bring up the chart.
You've seen this chart? Yes.
You know what I'm talking about. The drop off in IPOs, basically the
smallest combined value last year in a couple of decades, on top of a 68% fall
the year before that. So how are you going to get those bars
going back up? Obviously, there are different schemes
in place. The pipeline, you've said, is about 100
deep. What can you update from about a month
ago when we last talked to you? So, yes, I'm very familiar with that
chart. If we bring it up, I hope,
first of all, it's it's not specific to Hong Kong.
I think, you know, globally, the IPO market has been very challenging for the
last couple of years. I mentioned earlier capital formation,
you know, has changed a lot. You know, companies stay private for
longer. And for a lot of companies, you know, as
a result of, you know, geopolitical considerations and other reasons, they
may choose to list on the domestic exchanges, That's one of the phenomenon
we have picked up in the last. Couple of years.
Anyways, what we are doing, first of all, I, I think the, the proposition
that we are able to offer, it's still very compelling.
As you know, getting a listing starts is in Hong Kong and this applies to both
mainland Chinese companies, Hong Kong based companies, as well as
international companies giving you that unique opportunity to be stock connect,
include it, which is unique to Hong Kong.
No other exchanges offer that. And this is the 10th anniversary of
this. And this year it's the 10th anniversary
of the Stop on It program. And once you include it in the Connect
program, that means southbound and you know, flows.
You know, this is mainland investors looking to diversify their investments
can therefore invest in the stocks. And I will tell you that
recently we are seeing very strong flow southbound flows, which I think is a
reflection of the increased interest of mainland based investors to diversify
the investments. Obviously, you know, Hong Kong is a very
convenient place for them to try your hand, shall we say.
We provide them with this very convenient piece of infrastructure,
which is the Stock Connect program. And therefore I think that long term
promises that. Now, you asked me what is what has
changed right since we last spoke. I think a lot of you will be familiar
with some new some recent announcements from the mainland authorities.
And this is in April. So just a couple of months ago.
CSR see this? Yeah, go ahead.
April 19th. Yeah, there are two sets.
The first set was from the State Council, which is nine measures.
That was on the 12th of April, followed very shortly by the CSC on the 19th of
April. And the clear message, as you know from
one of the measures in the CSC set of five is that they are going to encourage
leading companies in the mainland to come to Hong Kong to seek a listing.
Now, if you look at that in conjunction with the State Council, nine measures, I
think there is a very clear direction of travel.
This the nine measures is more aimed towards the Asian market itself.
Right? They're talking about a lot of reforms
to raise quality, etc., which is very good.
They would like to also encourage a-share listed companies to
be be more frequent in terms of paying dividends to investors,
which to me translate into this kind of a division of labor amongst all the
exchanges, the three domestic ones on the mainland and Hong Kong, which is I
think Hong Kong now have a very special role to play in terms of supporting fund
raising needs of the new economy companies, especially the ones which are
not yet in a position to pay dividends, for example, of you are still very heavy
into R&D, right. That that's what you prioritize.
And for those companies, I think Hong Kong is becoming an even more attractive
venue for them to consider doing the IPOs.
Well, I want to talk about how Hong Kong can take advantage of this push by Xi
Jinping in the top leadership into the new three.
Yeah, so EVs into batteries, into solar, which has raised the ire obviously of
Western trading partners and the allegations of overcapacity.
So what can Hong Kong exchange do to help and
help the benefit of China's push for the new three and have more companies in
these areas list. But at the same time, you know, you have
to deal with potential, you know, blowback from the West and institutional
investors and their risk management. Okay.
So first of all, we need to provide them with the the framework to list because
at the end of the day, to build or to to develop further in those factories, you
need more companies, right? Better technology.
And all of that has to be supported by capital accessibility to capital.
So first of all, we already built the listing chapter for it, and that was the
most recent addition to our Red book. That's chapter 18 CE, which I wrote
before I left listing two years ago.
So with the chapter I and this is the chapter catering the needs of what we
call specialist technology companies, right?
These are pre-revenue companies heavy into R&D, but they're in areas such as,
you know, new energy. Right.
Which is what you're alluding to. And it also covers other things like new
materials, artificial intelligence, etc..
But they've only been. Can I play the devil's advocate here?
There's only been two under chapter 18. Yeah, one one is black.
Sesame is one and young with just got approval.
No, no, They've launched. They've launched.
Yeah, they've launched. Okay.
I read in the paper that the first day we are June 13th.
I guess they're going to retail subscription is already ten times of a
oversubscribed That's quantum farm. Yeah.
It's a bios by a tech company. It's a biotech company.
Yeah, but they use A.I.. So why would you call this a lukewarm
response to the specialist technology? Push the pre-revenue companies?
Well, I wouldn't say so. I think, first of all, we launched that
chapter only a couple of years ago, and it well, first of all, once you've
launched a chapter, right, it takes time for companies to
get the the process ready. Right.
They need to draft a prospectus and all that and then get the application in.
And frankly, rival companies, you know, which have a good equity story.
They're also timing the market. You only IPO once you want you want the
best valuation for your IPO. So I don't think you know it's it's a is
that in the fact you know what we are actually seeing is a lot of interest
especially following those five measures from the CCRC a lot of increase have
come in from specialist technology as well as biotechnology companies.
So I don't think that is an issue at all.
But to your earlier question, what are we doing right to
hopefully get that IPO momentum going or improving?
So first of all, all the listing framework is there know for the
specialist technology companies. And secondly, I think at the end of the
day, it's about building out that ecosystem.
So we have if you go back to 2018 when we introduced 18 A the biotechnology
chapter, I still remember I was in private practice back then.
There was no ecosystem, right? You have no research analysts in the
space in Hong Kong. We have very few specialist bankers or
lawyers who know how to write a biotechnology prospectus in town.
But in a short course of a few years, Hong Kong is now the second largest
biotechnology fundraising hub in the world, and we have since listed 68
biotechnology companies. And and it's you know, it's a compelling
offering that that we've successfully built.
So I think in the in terms of the new three that you're alluding to is to get
that ecosystem ready. Now, I do believe that the demand is
there. You talk about overcapacity, but what we
are seeing and, you know, is this phenomena now, a lot of you are
obviously aware that there are many countries have made
pledges to become carbon neutral by 2050 or 2060.
How are they going to get there? You don't just sort of, you know, wake
up one day and all of a sudden you transition, you need to build up to it.
And in building up to it, you need the enablers.
So you need EVs, you need solar panels, you need wind turbine turbines, and you
want to get access to those in an affordable manner.
Right. So I so remember, let me tell you a
short story. I was in Beijing in March for the China
Development Forum and I attended a fireside chat.
This one is between Tim Cook of Apple and a professor from Shanghai
University, and they were talking about green transition.
And that piqued my interest because you know what had you I was wondering what
Tim Cook had to say. And he was very straightforward.
He said that by 2030, Apple wants to produce all their products, everything
in a carbon neutral manner. And, you know, it's 2020 for six years,
right? From 2030.
Right now, they have only the Apple Watch that they manage to produce in a
carbon neutral manner. And he went on to say that it's because
the supply chain is mostly China. All the components was us there.
That got me thinking right. So if that's one company, right, getting
on with that green transitioning, multiply that for I don't know how many
tons right. This is what all the countries which
have made the pledge to be carbon neutral by 2050 or 2060, they have to do
the same. So the demand is there.
Okay. Now, whether or not, you know, you know,
people people can debate about whether this is overcapacity or not, But I still
want report by asking the same question, how are these countries going to get
that? Obviously, data security reviews are a
big part of approval from the CCRC to list abroad.
And Hong Kong is is in essence a market that is a separate jurisdiction.
So we're going to see more listings, but are we going to get the approval for
those sensitive industries in AI, in quantum computing, in semiconductors?
I know that we just got CSR approval for the FedEx of China.
S.F. That potentially could be upwards of $3
billion. I've seen a number of different numbers,
a 1 billion listing or 3 billion U.S. dollars.
So are you expecting a sort of a slow tide in or a tidal wave of listings
coming? So first of all, you mentioned the CCRC
approval. That's a relatively new introduction.
It only started from the end of March last year.
So I think that does take the time for the authorities in the mainland to get
used to the rhythm of. The mike just spoke.
I was about to give you mine. So.
It's okay. We're good.
It came back. So it does take time, right?
For everyone to get used to the rhythm of
going through the filing process. And it's not just the CCRC.
In order for a company looking to list all of us offshore, whether it's Hong
Kong or other markets, they need to also go to the respective industry
regulator to to get, you know, the green light.
And so, you know, I think what we saw last year and a lot of people say, well,
it took very long. It's more more teething issues.
For me, it seems like that to me. And over time, we have now seen
companies in different categories successfully getting the the green
light. Okay.
So I still remember the first batch came out and end of May last year with all
eight share companies, companies Incorporated and the PRC law and
everyone got very concerned. Oh, does it mean that retro companies
cannot get the green light right? Then of course, the second batch they
approve a lot of red chips.
Then people ask, always, does that mean these wouldn't get
approval? Then of course, Vice got approved.
So I think, you know, we just have to wait for the process to.
But I'm very impatient room here. They want to know Didi.
They want to know Aramco. They want to know
ant Financial. They want all the big ones.
S.F. is a good step.
That's going to be a big listing. Yeah, but you're you're cautious, you
know? You're not.
You know I'm not. I know you're not going to about this.
Yeah, I'm not able to talk about any specific company, but suffice to say
that it's good that the room is talking about it, because, you know, that to me
means that you want to see these listings in Hong Kong, Right?
So we will do all want you to continue pitching to them.
And I do really believe that Hong Kong is a very compelling listing platform
for all these companies. What's your priorities for your
international outreach? Obviously, you had a conference here
with Saudi Arabia. There is a Saudi ETF listed here.
Could there be a Hong Kong or HCI index ETF in Riyadh?
Could there be dual listings? What what are you looking at right now?
Oh, yeah, I'd love to talk about that. I mean, of course, the Middle East is
only one minute 20 example of our international reach.
You know, we do a lot in Americas and Europe as well as
Southeast Asia. But yes, that's the IMF conference we
hosted a few weeks ago was a smashing success with 650 people attending the
conference above. 200 of them actually flew in from the
Middle East. And what we did was not only the main
stage events, we hosted 300 plus bilateral meetings to match make
investors and corporates from both the Middle East as well as Hong Kong, China.
And we think that, you know, through these bilateral meetings, hopefully a
lot of business opportunities will come out whether or not there will be an IPO.
And, you know, we will we will wait and see.
But suffice to say that our cooperation with especially the Saudi Tadawul group
started in February last year when we signed the module and we have been
actively working on it. So it doesn't stop with a more.
You write Since then we've recognized Tadawul as they recognize stock
exchange, so that company listed there can come to Hong Kong for a secondary
listing. We have listed the first ETF, Saudi ETF,
This is the first in Asia and the biggest globally to date.
And then we also see CMV, which is very successful.
And I will tell you that later this year in October, I will be there for the IMF.
Yep. Yeah, we're out of time.
But I have to ask you, your best investment.
I know you've been in the gym this morning already.
Oh, yes. You wake up at 330 or 4:00 in the
morning. So obviously you're investing in your
health. Yes, but what's your most important
investment? So that.
That's exactly my best investment. So.
Oh, okay. Well, this job, it does require a lot of
energy. So I'm a I'm a member of the 5 a.m.
Club. In fact.
445 to be exact. I go to the gym, I wait, I lift weights.
But it's really great getting that energy right so that I can go into the
office, you know, have a fresh mind. And my job does give me a lot of energy
back on that happy note. Thank you so much.
I have more questions, though. We'll have to resume the conversation.
World Economic Forum in Dalian. And then at the end of that, we go.
All right. Thank you.
Thank you, Bonnie Chan. Thank you.
