Hong Kong’s role as a link between the Chinese mainland and the West under the “one country, two systems” principle will become more important in the wake of recent geopolitical issues, said Charles Li Xiaojia, chief executive of the Hong Kong Exchanges and Clearing.
This principle can continue to accommodate the interests of the Chinese mainland, the United States and other international players, Li told an online forum on Thursday.
Hong Kong’s financial system remains strong, but the many uncertainties stirred by the “Hong Kong Autonomy Act” need to be resolved.
Charles Li Xiaojia
Hong Kong Exchanges and Clearing (HKEx) Chief Executive
Hong Kong’s financial system remains strong, but the many uncertainties stirred by the “Hong Kong Autonomy Act”, signed into law by US President Donald Trump on Tuesday to sanction China and the SAR, need to be resolved, Li added.
The Sino-US frictions have made it more important for Hong Kong to play its role as a link between the two economies, buttressed by the governing principle of “one country, two systems”, he said.
The Hong Kong stock market has coped well with these uncertainties this year, on the back of returns from its investments over the past few years, such as the two stock-trading connect programs with the Chinese mainland and listing regime reforms.
The average daily trading turnover of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect reached record highs in recent weeks, buoyed by abundant market liquidity. The daily northbound trading turnover of the Bond Connect is close to HK$30 billion ($3.87 billion).
“Celebrating its 20th anniversary, the HKEX has become the largest exchange in the world in terms of market value with its share price spurting from $3.88 on debut to the current level,” added Li.
The HKEX share price closed at HK$336.20 per share on Thursday.
The city’s bourse has attracted listings from a host of mainland technology companies such as Xiaomi Corp and Alibaba Group after HKEX introduced listing regime reforms.
“The two stock connect programs and listing regime reforms have reoriented the city’s bourse, and it has entered a new era of development,” Li added.
However, Li said, investors might have to wait until next year for a meaningful breakthrough in the commodity connect program. The HKEX aims to replicate the stock-trading connect model for commodities trading and clearing by linking HKEX’s subsidiary, London Metal Exchange, with the Qianhai Mercantile Exchange.
“We are liaising with LME and Qianhai Mercantile Exchange over the issues of inventory and commodity pricing. We hope this new market connect initiative can make a breakthrough next year, depending on cooperation with relevant financial regulators on the mainland,” Li added.
