HKEX PICKS CARLSON TONG AS NEW CHIEF
Former head of the city’s securities regulator will work with CEO Bonnie Chan as the exchange grapples with low turnover and drop in listings
Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock market, has named former Securities and Futures Commission (SFC) chairman Carlson Tong Ka-shing, a veteran accountant and market regulator, as its new chairman.
Tong was elected by the board yesterday to succeed Laura Cha Shih May-lung, who retires after a six-year term.
“I am committed to spearheading our collective efforts to continuously reinforce Hong Kong’s strategic role as a global financial hub,” Tong said in a statement after taking on the new role. “We recognise that we operate in a dynamic and evolving environment, presenting both challenges and opportunities.
“While certain external factors like geopolitics and interest rates remain beyond our direct control, we must be proactive in preparing ourselves to seize opportunities when the external environment improves.
“Simultaneously, we shall focus on diversifying our product ranges, enhancing our trading mechanisms and bolstering our competitiveness. By navigating the immediate challenges and positioning ourselves for longterm opportunities, we will fulfil HKEX’s obligations to the investing public while delivering value to its shareholders.”
Tong will receive a HK$4.55 million director’s fee annually, according to a stock exchange filing. His term runs until the end of his directorship at HKEX’s annual general meeting in 2025, when he could be reappointed.
In her final media briefing with HKEX, which followed the bourse operator’s annual general meeting, Cha said the turnover and initial public offering applications had improved in recent months.
“I am positive on the outlook of HKEX, which will benefit from the improved economy,” she said. “The exchange will continue its internationalisation process to strengthen its connector role between the mainland [Chinese] capital markets and the world.”
Cha said she was proud of her involvement in opening overseas offices for HKEX in London and New York during her tenure, adding that she was retiring from the frontline role after working in the capital markets for more than 30 years.
The board appointed Cha as a senior adviser for one year.
Tong will work closely with recently appointed CEO Bonnie Chan Yiting to lead HKEX at a time when it is grappling with challenges like poor liquidity and falling new listings.
Tong, 69, was the SFC’s chairman from 2012 to 2018. Before that, he was the chairman of KPMG China from 2007 to 2011 and also headed HKEX’s listing committee from 2006 to 2008.
During Tong’s tenure, the SFC tightened oversight of the market, handing out nearly HK$4 billion in fines and compensations in several high-profile cases of insider dealing, false disclosure, failure of internal controls, mis-selling and other wrongdoing.
In September, Tong was appointed by Financial Secretary Paul Chan Mo-po to chair a 13-member task force to study ways to improve stock market liquidity.
“[Tong’s] immense knowledge of and experience in the operation of the financial market and regulation of securities-related activities will contribute to HKEX in further enhancing its competitiveness and expanding its business,” Chan said when he appointed Tong to the HKEX board in February 2023.
HKEX has 13 directors, including CEO Bonnie Chan, six appointed by the government and the rest by shareholders.
Frederick Ma Si-hang, chairman of Hong Kong insurer FWD Group Holdings, said Tong was a good choice. Ma worked with Tong when he was listing committee chairman and Ma was secretary for financial services and the treasury.
“Carlson is the ideal person to serve as chairman of the HKEX because he has deep and valuable strategic insights across the capital markets,” Ma said. “His remarkable track record and exceptional leadership and excellent communication skills with all stakeholders will lead the HKEX to expand further in the coming years.”
Kelvin Wong Tin-yau, chairman of the Accounting and Financial Reporting Council, who was an independent director of the SFC from 2012 to 2018 when Tong was chairman of the market regulator, also chimed in with his approval.
“Carlson is a well respected chairman to work with as he always prepared well for the agenda and actively engaged with members to ensure different views are understood and discussed,” Wong said.
“He is an open-minded, highly diligent chairman who is able to bring the board to focus on the big picture. He has showed his charismatic ability to build consensus among members with diverse views.”
Local brokerages said Tong’s leadership was much needed at a difficult time.
“It is great to have [Tong] who has a great experience in the local capital market to chair HKEX,” said Robert Lee Wai-wang, a lawmaker representing the local financial services sector.
“We would like to see the new chairman carry out more reforms to enhance the market turnover and to expand the global status of the exchange in coming years.”
Carlson … has deep and valuable strategic insights across the capital markets FREDERICK MA, FWD GROUP CHAIRMAN
Hong Kong Exchanges and Clearing (HKEX), which operates Asia’s third-largest stock market, reported a 13 per cent drop in profit for the first quarter as fewer new listings and lower turnover took a toll.
Net profit for the three months to March 31 came in at HK$2.97 billion, or HK$2.35 per share, better than a consensus estimate compiled by Bloomberg for HK$2.79 billion.
The result represents the bourse operator’s best quarter in the past year, exceeding the fourth quarter of 2023 by 14 per cent, the third quarter by 1 per cent and the second quarter by 2.4 per cent.
Total revenue in the first quarter declined by 6 per cent to HK$5.2 billion, beating analysts’ estimates for HK$4.96 billion.
“HKEX demonstrated its strength and resilience in the first quarter of the year,” newly appointed CEO Bonnie Chan Yiting said in a statement issued yesterday.
“Despite a fragile global backdrop, the group’s derivatives and commodities businesses performed strongly, with the former achieving record quarterly volumes.
“Whilst the cash market reflected broader macro sentiment and remained soft, there was a notable uptick in headline average daily turnover in March and April, indicating growing investor confidence.”
HKEX chairwoman Laura Cha Shih May-lung hosted her last annual general meeting yesterday before stepping down from the role she had held for six years.
As widely expected, the board immediately elected former Securities and Futures Commission chairman Carlson Tong Ka-shing as the new chairman, with an annual director’s fee of HK$4.55 million.
Shares in HKEX closed 3.6 per cent higher at HK$239 after the results announcement. They have declined by 11 per cent this year.
The bourse operator blamed the profit decline on lower fee income after average daily trading turnover dropped by 22 per cent year on year to HK$99.4 billion during the first quarter.
The city’s benchmark Hang Seng Index lost 3 per cent in the first quarter after a drop of almost 14 per cent last year.
HKEX’s revenue also suffered from a 25 per cent decline in listing fees as a drought in initial public offerings continued.
Twelve companies raised HK$4.73 billion from first-time share sales in Hong Kong in the first quarter, a 29 per cent fall from a year earlier, according to data compiled by London Stock Exchange Group.
That is the least amount since the US$580 million generated in the second quarter of 2022 and the worst first-quarter performance in 15 years.
The bourse operator also reported a 3 per cent drop in net investment income and interest income.
It booked a HK$535 million net investment gain from its portfolio of global stock and bond investments in the first quarter, compared with a gain of HK$549 million a year earlier.
This was partly offset by increases in derivatives trading and turnover in the Stock Connect cross-border scheme.
Total derivatives trading rose by 14 per cent in the first quarter to 855,000 contracts a day. The average daily turnover of the northbound channel of the Stock Connect grew by 37 per cent to 133 billion yuan (HK$143.7 billion), while northbound bond transactions increased by 22 per cent to 45.2 billion yuan per day, the firm said.
Metal contracts trading at the London Metal Exchange, a wholly owned subsidiary of HKEX, also jumped by 31 per cent year on year to 659,000 lots per day.
Brokers are optimistic about the outlook for the Hong Kong exchange.
“It is highly likely that the period of record-low trading activity has already bottomed out in the fourth quarter of last year,” Kenny Ng Lai-yin, a strategist at Everbright Securities International, said after the results announcement.
Since the beginning of this year, average daily turnover had rebounded to HK$96 billion, an increase of nearly 6 per cent from the fourth quarter of last year and also surpassing the level seen in the third quarter of last year, exchange data showed.
“The current valuation and trading activity of Hong Kong stocks are synchronised in a lowposition rebound cycle,” Ng said. “This situation is also more favourable for a potential recovery in the listing market after the Beijing regulator’s new measures to encourage mainland firms to sell shares in Hong Kong.”