HELPING Chinese investors tap into investment opportunities among international companies, and vice versa, is one of Hong Kong Exchanges and Clearing’s (HKEX) main priorities, said its chief executive Nicolas Aguzin in an interview with The Business Times on Monday (Jul 24). 

He is part of a delegation led by Hong Kong Chief Executive John Lee, who is in Singapore for an official visit to strengthen ties between the two economies.

“There’s about one trillion yuan (S$185.2 billion) in onshore market average daily turnover that is traded everyday,” said Aguzin, noting that the Chinese onshore market has been active in recent years, despite major downturns observed in global capital markets elsewhere.

“However, that investor base could only invest in two things – companies traded in the mainland, and Chinese companies that traded in Hong Kong.”

But with HKEX’s recent introductions to allow mainland investors to trade directly in international stocks listed in Hong Kong, all that is changing. 

Last year, there were about 90 initial public offerings (IPOs) in Hong Kong. This year till date, it has seen 39 IPOs –  a “result of the confidence” that Hong Kong has from the international community, said Aguzin. 

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But beyond stock listings and IPOs, the exchange is also looking to broaden its product offerings, particularly in exchange-traded funds (ETFs) and bond market offerings.  

HKEX currently has three crypto ETFs, two of which listed last December – making them the first crypto ETFs to be launched in Asia. 

While the exchange would like to welcome more of such listings, it also recognises the need for a regulated environment for such assets. On this, Aguzin said HKEX has been speeding up the regulatory set-up and construction of its market to prepare for more of such listings.

“The ETF market has been very vibrant in Hong Kong, (and) very exciting and has been growing at a healthy rate,” he said. 

Besides expanding its services and offerings, Hong Kong is also looking to leverage its relationship with Singapore – one which Aguzin sees as win-win. 

Singapore is at the heart of South-east Asia, one which houses nearly half of the region’s unicorns, he noted.

“Imagine you have a market like ours, and you have all these unicorns… That creates a great opportunity,” he said.

Reaffirming relations

This is Chief Executive Lee’s first visit to Singapore since he was sworn in last year. On Monday, he called on and was hosted to lunch by Prime Minister Lee Hsien Loong at the Istana, where both reaffirmed the long-standing relations between Singapore and Hong Kong.

In a Facebook post, PM Lee, who last met the Hong Kong leader at the Asia-Pacific Economic Cooperation summit in Bangkok last November, noted that both sides share a close relationship.

“Hong Kong is home to one of the largest overseas Singaporean communities, which reflects our close people-to-people ties,” said PM Lee. “Our cities face similar challenges as global hubs in our respective regions. We can learn from and work with each other in many ways, including through civil service exchanges. By cooperating, we will contribute to the growth and vibrancy of our two cities and the wider region.”

PM Lee also expressed confidence in Hong Kong’s continued development and prosperity under the “One Country, Two Systems” framework.

Earlier in the day, Chief Executive Lee had breakfast with Deputy Prime Minister and Finance Minister Lawrence Wong. In a statement, Singapore’s Ministry of Foreign Affairs (MFA) said the pair “affirmed the warm and friendly ties” between Singapore and Hong Kong.

“As international financial centres, Singapore and Hong Kong enjoy close cooperation on fintech, information sharing, as well as supervisory and regulatory matters,” said MFA. “With Singapore and Hong Kong playing complementary roles in their respective regions, both sides stand to benefit from further deepening collaboration, including in South-east Asia and the Guangdong-Hong Kong-Macau Greater Bay Area.”

In 2022, Singapore was Hong Kong’s fourth-largest trading partner, the largest among Asean member states. Hong Kong was Singapore’s fifth-largest trading partner with a foreign direct investment flow of S$10 billion.

On Monday evening, Chief Executive Lee attended a dinner together with Deputy Prime Minister Heng Swee Keat. At the event, it was announced that Singapore signed seven memoranda of understanding with Hong Kong, covering areas such as business promotion, fintech, innovation and entrepreneurship, decarbonisation, as well as research and development.

One of the agreements was inked between the Singapore Business Federation (SBF) and the Hong Kong Trade Development Council, which seeks to facilitate mutual economic growth and business opportunities between Singapore and Hong Kong.

It will also aim to facilitate the exchange of information and expertise related to trade and services-related statistics, local government policy on trade and investment, as well as investment projects. 

The two sides will also offer support in organising trade and investment events, provide mutual assistance on trade enquiries, business matching and networking activities, and access into both economies for businesses to reach a broader international audience, SBF added.

In a speech at the dinner, Chief Executive Lee said there was good potential for Hong Kong’s startup entrepreneurs to work with their peers in Singapore on new ventures and to open up new markets in the region.

Singapore is the first stop of a week-long trip to South-east Asia for Chief Executive Lee. He departs on Tuesday and will visit Malaysia and Indonesia next.