HKEX’s first woman CEO says Hong Kong’s exchange could name and shame listed companies that stick with single-gender boards

The stock market in Hong Kong is declining. The Hang Seng Index, a benchmark that tracks major companies in the stock market, has fallen. four straight years. But the city’s exchange leader believes that Hong Kong’s relationship with China – often criticized for being weak – is what will bring growth.

Chan blamed Hong Kong’s decline in the past few years, perhaps in part, on the short-term issue of banks – tighter monetary policy – as capital markets tend to struggle with higher interest rates. But Chan said Hong Kong’s role as a major link between China and the rest of the world means there will be more opportunities over time.

“I can’t tell you whether they will hit the bottom or not,” said Bonnie Chan, the new CEO of Hong Kong Exchanges and Clearing (HKEX), at the Fortune Innovation Forum in Hong Kong on Wednesday. “[There are] Many challenges are ahead of us, but at the same time I see more opportunities. “

Hong Kong as a major hub

“The most important part of the exchange is the integration of money and opportunity, so everyone who has money is the one who needs money,” said Chan, adding that Hong Kong still works, as it always does, as a gateway to the Chinese market.

This plays in Hong Kong’s favor because China still has the potential to grow in the long term, Chan said, referring to Beijing. 5% growth forecast. for this year. This is lower than the 7.7% annual growth experienced in the decade before the outbreak, but Chan reminded the audience that the growth of 5% is still the largest number of the world’s second largest economy.

Similarly, Chan pointed out that the decline in primary contributions that Hong Kong experienced last year was insignificant compared to the figures for 2022. (There was 73 IPO in 2023 and 90 in 2022). Chan acknowledged that the shortfall in earnings was significant, but also noted that falling into valuations he was all over the world.

That too, Chan said, will soon change.

“There are a lot of exciting companies that are trying to innovate, come up with new innovations, and this will be a very powerful offering on the road,” Chan said.

One way Chan said the Hong Kong exchange wants to strengthen its listings is to increase its interaction with other exchanges. He said HKEX has signed several memorandums of understanding and exchanges in Southeast Asia and has an office in Singapore.

All of these efforts, Mr. Chan says, are to ensure that Hong Kong is considered when companies are considering a second listing or two major listings. He said that companies in recent years have decided to register for domestic exchanges, and he suggested that the rise of the country and the control of COVID in transportation could be the reason.

But eventually these companies will need to sell to deeper markets like Hong Kong, Chan predicted.

Who is Bonnie Chan?

Bonnie Chan was appointed CEO of HKEX on March 1, taking over from Nicolas Aguzin.

Chan is the first CEO of a bourse company, having served as CEO of HKEX. Her rise to the top job comes as the company seeks to improve gender representation in the public sector. In 2022, HKEX ordered that all the mentioned companies must stop having single-sex boards by the end of 2024. Applicants to the new list must also have at least one female director.

“When we introduced the law, the number was close to 800 companies with the same groups. This was about a year ago. Currently, the number is slightly less than 500,” said Chan. He added that this number will drop significantly as companies move into the annual meeting season in April and May.

HKEX has not yet decided how to punish companies that have not followed the exchange’s instructions to update their boards by the end of the year, Chan said. At the very least, there may be “naming and shaming,” which will prevent large investment funds that are now looking at policies as exceptions.

Hong Kong lags behind other financial centers when it comes to gender diversity on company boards. Earlier on Wednesday, at the Fortune Innovation Forum’s Most Powerful Women breakfast, Chan said Hong Kong’s slow progress was due to the city’s high number of family-owned companies, which have traditionally been slow to embrace gender equality. . He said: “According to Chinese tradition, we always prefer a male child.”

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