05.07.2020

CEO Of Hong Kong Exchanges To Step Down

Mr Charles Li, Chief Executive, Hong Kong Exchanges and Clearing Limited (HKEX), today informed the Board of his intention not to seek reappointment as HKEX Chief Executive at the end of his current contract, in October 2021.

Mr Li confirmed his full commitment to continuing to lead the organisation until that date, or earlier, should a successor be appointed before such time.

HKEX has formed a selection committee, led by HKEX Chairman Mrs Laura M Cha, with HKEX Directors, Mr Apurv Bagri, Mr Benjamin Hung and Mr Rafael Gil-Tienda, to conduct a formal search process.

Laura M Cha, HKEX Chairman, said “I would like to extend my sincere gratitude to Charles for his extraordinary leadership and contribution to the Hong Kong market over the last decade, and to thank him on behalf of the Board, for giving us as much time as possible to ensure a smooth transition. The Board is confident that the succession process will be smooth and orderly and that the Group is on a strong foundation.”

A formal announcement under Rule 13.51(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited relating to the above change will be made when it takes effect.

QUARTERLY RESULTS FOR THE THREE MONTHS ENDED 31 MARCH 2020

Charles Li, Chief Executive said: “Our focus in these extraordinary times has been on maintaining resilient and fully functioning fair and orderly financial markets. Despite one of the most volatile and uncertain periods in recent times, HKEX core businesses in Cash, Derivatives and Commodities have had a good quarter, reflecting record Stock Connect and Bond Connect quarterly volumes and 39 new company listings, ranking HKEX first in the world for number of IPOs in Q1 2020. We have not been unaffected by the macroeconomic conditions however, with the significant fall in global portfolio valuations impacting our investment income, though we have, and continue to take steps to de-risk our collective investment schemes. We are on track with our Strategic Plan 2019-2021, well-placed to capture future growth opportunities, and fully focused on managing our costs and risks. I am confident that HKEX is well-prepared for the challenges ahead of us.”

Strategic Highlights

Hong Kong’s initial public offering (IPO) market ranked first globally by number of IPOs in Q11 2020 (39 new company listings) and fourth globally by IPO funds raised ($14.4 billion)

Southbound Trading Investor Identification Regime was successfully rolled out on 13 January 2020, facilitating enhanced orderly operation and regulation of Stock Connect

Bond Connect ADT reached a record quarterly high of RMB19.3 billion, more than triple that of Q1 2019

Cash Market Volatility Control Mechanism (VCM) Phase 1 enhancement, covering expanded VCM stock coverage and tiered triggering thresholds, will be launched on 11 May 2020

HKEX welcomed its first Iron Ore Futures Exchange Traded Fund (ETF) in March, another important step in building a diverse ETF ecosystem in Hong Kong

HKEX is working closely with the HKSAR Government to introduce stamp duty waiver on stock transfers paid by ETF Market Makers when creating and redeeming ETF units, as proposed in the 2020-21 Budget delivered by the Hong Kong Financial Secretary in February

A number of further initiatives and innovations during the quarter were implemented including the introduction of a virtual IPO ceremony option for newly listed issuers; and HKEX’s elevation to World Economic Forum Strategic Partner Business Continuity and Operational Resilience HKEX as both a listed company, and operator of regulated exchanges and central clearing counterparties, recognises the important role it plays as corporate and in global financial markets.

In response to the COVID-19 outbreak, the following measures have been adopted:

Focused programmes to minimise contagion risk to staff and customers; and full function and continuation of operations. All critical services have remained operational with no material impact to service levels

Adoption of an established and comprehensive business continuity planning (BCP) and operational framework to ensure service resiliency, availability and stability across HKEX platforms

The LME successfully transitioned trading on the Ring to electronic pricing platform, temporarily

Operational processes have remained resilient and robust, responding to increased market volatility, demands on counterparty risk and the smooth execution of settlement activity

Financial Highlights

Q1 2020 revenue and other income was 7 per cent lower than Q1 2019 (7 per cent higher than Q4 2019)

Core business revenue was up 19 per cent against Q1 2019, driven by a 20 per cent increase in headline ADT, resulting in an increase in trading and clearing fees

Q1 2020 Stock Connect revenue and other income reached a record quarterly high of $404 million, up 74 per cent on Q1 2019. Northbound and Southbound ADT reached quarterly highs of RMB78.0 billion and $21.6 billion respectively

Net investment loss was $47 million (Q1 2019: income of $882 million) due, predominantly to the macro-driven impact on the fair value of collective investment schemes

Operating expenses were 6 per cent higher than Q1 2019 (11 per cent lower than Q4 2019), attributable to annual payroll adjustments and increased headcount arising from the acquisition of BayConnect Technology Company Limited (BayConnect) in June 2019, and higher professional fees incurred for strategic projects and other business initiatives

EBITDA2 margin was 74 per cent, 3 per cent lower than Q1 2019 (5 per cent higher than Q4 2019)

Profit attributable to shareholders was $2,262 million, 13 per cent lower than Q1 2019 (14 per cent higher than Q4 2019)

Source: Hong Kong Exchanges and Clearing Limited

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