Opinion | Full agenda for Tong as HKEX chairman

From watchdog to operator, Carlson Tong Ka-shing will put on a very different hat as chairman of Asia’s third-largest stock market. As expected, Hong Kong Exchanges and Clearing (HKEX) has picked the former chairman of the Securities and Futures Commission (SFC) alongside CEO Bonnie Chan Yiting.

They have their work cut out for them. The bourse has suffered from low turnover and a decline in new listings.

Tong will bring to the role decades of experience in financial services and public policies. An independent non-executive director of HKEX since last April, he is plugged in to the exchange’s mission and strategy.

As SFC chairman from 2012 to 2018, he oversaw the 2014 introduction of the cross-border Stock Connect, providing a way for mainland investors to invest abroad, and for international funds to access China, all via Hong Kong. The scheme has since expanded to cover bonds and exchange-traded funds.

The office of Hong Kong Exchanges and Clearing (HKEX) in One Exchange Square, Central. The bourse has suffered from low turnover and a decline in new listings. Photo: Jelly Tse.

Transactions in what was once the world’s third-largest capital market have trickled to a multi-year low. The bourse was the go-to destination for IPOs in seven of the past 15 years.

Now it struggles to remain in the top 10. With interest rates at 5.25 per cent, investors have opted for more fixed deposits.

But with stocks trading at about five times current earnings, the Hang Seng is the world’s cheapest major index, with much value once investors return to equities.

Tong will need to keep his sights on honing HKEX services to make it the go-to platform for fundraising. His agenda will be full.

First, HKEX needs to be a truly all-weather exchange, even on days when typhoon signal No 8 is in force, because global capital requires seamless and uninterrupted markets to function. The public consultation for inclement weather trading is due soon, so hopefully it may be in place before typhoon season begins this summer.

Hong Kong stock market operator HKEX picks Carlson Tong as chairman

Second, HKEX needs to be a global exchange, not just the offshore platform for the mainland, whose companies have come a long way, making up 76 per cent of the bourse’s market value last year.

HKEX must diversify its capitalisation to attract companies from Southeast Asia, the Middle East, and Europe to list in Hong Kong. The groundwork has been laid.

Now swift and good execution will be needed once rates start falling and market conditions improve.

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