Hong Kong Exchanges and Clearing Limited (HKEX) has had a very busy year, reporting record nine-month results and trading volumes to September 2020, whilst continuing to innovate and strengthen the competitiveness of its markets with the launch of new products and initiatives. This, despite the turbulent geopolitical and economic backdrop, and the challenges brought about by the Covid-19 pandemic. Throughout, HKEX has demonstrated its resiliency and adaptability, reinforcing its role at the heart of Asian financial markets.
HKEX has delivered on all three pillars of its current strategic plan; China Anchored, Globally Connected and Technology Empowered. During the year, a host of new enhancements to both Stock and Bond Connect has added to the attractiveness of these landmark mutual market access programmes with the Mainland Chinese market, while new market microstructure improvements have added to the competitiveness and attractiveness of Hong Kong as a trading and destination financial market.
The July launch of MSCI Asia and Emerging Markets index futures and options products cemented Hong Kong’s position as the region’s leading derivatives trading hub, extending HKEX’s international footprint and deepening relationships with global investors across asset class.
In November, HKEX unveiled plans to develop a transformative new platform, FINI, which will streamline Hong Kong’s IPO settlement process and secure its position as the world’s listing venue of choice. This in-depth innovative proposal highlights the Group’s commitment to technology and the progression of Hong Kong’s markets. HKEX also recently announced the introduction of Synapse, a programme to greatly improve efficiency and transparency in Northbound Stock Connect’s post-trade processes, enabling many more international investors to participate in Mainland Chinese equities markets.
Following the 2018 listing reforms, HKEX’s commitment to adding to the vibrancy and diversity of Hong Kong’s markets have produced very encouraging results, with a number of primary and secondary listings that have helped transform the local market composition, as well as an increase of 61 per cent in total listing funds raised from new economy companies, year to date*. Hong Kong is now Asia’s most thriving financial ecosystem for technology and new economy companies.
HKEX is on track to record its best year in terms of IPO fundraising amount since 2010, with new economy companies accounting for close to 60 per cent* of IPO funds raised in Hong Kong since the new listing rules took effect. Average daily turnover contribution from new economy companies listed since 2018 in the cash equities market rose, from 4.1 per cent in 2018 to 22.8 per cent in November 2020. In a very short time frame, Hong Kong has now also become the world’s second largest biotech fundraising hub, ushering in 47 healthcare and biotech listings to the HKEX Main Board since the launch of the new listing regime.
To commemorate its own 20th Anniversary as a public company, HKEX’s newly established charity, HKEX Foundation, launched its flagship HKEX Charity Partnership Programme, with an Anniversary $20 million commitment to support long-term projects for community causes in four areas - financial literacy, social diversity and inclusion, poverty relief, and environmental sustainability. This Partnership Programme sat alongside other HKEX philanthropy in 2020, with a total of over $100 million donated year to date to our communities To support HKEX’s commitment to sustainability, and Hong Kong’s ambitions to be Asia’s leading centre for green and sustainable finance, HKEX also launched Asia’s first multi-asset sustainable investment product platform, the Sustainable and Green Exchange (STAGE), featuring, at launch, 29 sustainable-themed products from leading Asia corporates.
Looking to 2021, HKEX remains focused on successfully executing its strategic plan to capture further growth opportunities in the region and beyond, helping realise its vision to be the “Global Markets Leader in the Asian Time Zone”.
“HKEX has had a very good year, and despite the challenging macro environment our business is thriving. We continue to execute and deliver on our three-year Strategic Plan, we are well-placed to capture future growth opportunities, and we are fully focused on managing our costs and risks. 2020 has shown that our position at the heart of Asian financial markets has never been more important. I have every confidence that HKEX will continue to play a vital role connecting investors, corporates and markets around the world,” said HKEX Chief Executive Charles Li.
HKEX would like to share its thanks and appreciation to all its partners and stakeholders for their support and dedication in enhancing the robustness and competitiveness of Hong Kong’s markets in what has been globally a very challenging year. We look forward to working closely with you in the months and years ahead.
Here is a look back at some of the year’s highlights:
Financial, Corporate & Strategic Highlights
- Record revenues and other income reported Jan-Sept 2020, of $14,091 million, up 12 per cent year on year
- Major licensing agreement with MSCI to launch Asia and Emerging Markets index futures and options contracts
- 20th Anniversary of HKEX as a listed company
- HKEX Foundation and Charity Partnership Programme launched
- Celebrated Stock Connect’s 6th Anniversary and 3rd Anniversary of Bond Connect
Listing and IPOs
- Hong Kong’s position as a premier global IPO hub reinforced with a 25 per cent rise year-over-year in total IPO fundraising volumes so far in 2020*
- 26 new listings under the pre-revenue biotech chapter , raising a total of $70.7 billion since the launch of the new listing regime in 2018
- Consultation conclusions on Corporate Weighted Voting Rights (WVR) companies published, with new grandfathering arrangements introduced to enable qualifying issuers with Corporate WVR to seek secondary listings in Hong Kong
- Consultation paper on Main Board profit requirement published
Innovation and Technology
- Launched FINI Concept Paper for streamlining IPO settlement process. Proposal will deploy intelligent technology to drive efficiency, alleviate funding lock-ups and digitalise Hong Kong’s IPO franchise
- Synapse platform to be launched in 2022. The platform will standardise and streamline post-trade workflows of Northbound Stock Connect
- Innovation and Data Lab continues work to deploy new technologies on core business functions including deployment of AI and Robotics
- Pioneering digital transformation initiative rolled out to delivery paperless IPO applications and issuer disclosures, to improve data quality and increase automation
- Artificial intelligence programme introduced to assist in annual report compliance review
Products and services
- New product types in Hong Kong markets: first listings of Iron Ore Futures ETF, Commodity L&I products, Hong Kong-listed A-share L&I products, launch of USD and CNH Silver Futures; MSCI Asia and Emerging Market Index Futures; Hang Seng TECH Index Futures
- Launched Master SPSA service as part of Stock Connect enhancements
- Hong Kong-listed pre-revenue biotech companies and A-shares listed on Shanghai’s STAR Market to be included in Stock Connect trading
- New spread table and continuous quoting market making obligations for Exchange Traded Products (ETPs) introduced to enhance the liquidity of Hong Kong-listed ETPs
- OTC Clear launched clearing services for Hong Kong Dollar Overnight Index Average (HONIA)-based interest rate products
- LME plans to develop its electronic Options market while maintaining the flexibility of its current inter-office Options trading structure
- Enhancements to the Pre-opening Session (POS) and Volatility Control Mechanism (VCM) in the Hong Kong securities market successfully implemented
- Structured products’ listing cycle shortened to three trading days
- Consultation conclusions on Uncertificated Securities Market (USM) published, marking a significant step forward in developing a scripless securities market in Hong Kong
- LME introduced new rules on optimising its warehouse network
- LME commenced publishing off-warrant stock data, delivering increased transparency on global metal availability
Corporate Social Responsibility and ESG
- Launched Asia’s first multi-asset sustainable investment product platform, Sustainable and Green Exchange (STAGE), featuring 29 sustainable-themed products from leading Asia corporates at launch
- LME published industry discussion paper on sustainability and will proceed with its vision to make metals the cornerstone of a sustainable future
- HKEX selected as a constituent of the Dow Jones Sustainability Asia Pacific Index for 11th straight year
- Published additional guidance materials on ESG reporting
Covid-19 related response and resiliency
- HKEX, together with the Securities and Futures Commission, issued guidance on the publication of annual reports, as well as the hosting of general meetings, reducing the impact of the Covid-19 pandemic on listed companies’ compliance efforts
- Virtual listing ceremonies introduced as innovative digital alternative to welcome new listings in Hong Kong
- Emergency Covid-19 relief donation of $10 million donation in support of local communities
- A credit of $10,000 to every trading Exchange Participant, recognising the impact of the volatile economic conditions
- The LME temporarily suspended Ring trading ,and metals prices have been produced on the basis of electronic activity on its electronic platform
Awards and Accolades
- Best Corporate Governance Gold Award by the Hong Kong Institute of Certified Public Accountants
- Best Annual Report Award by Hong Kong Management Association
- Best Structured Product and Derivatives Exchange and the Most Innovative Solution (Inline Warrants) awards from SRP
- Other award information available on the HKEX Group website
Market Statistics for the period 1 January to 30 November 2020 is now available.
Here are some photo highlights of the year.
Chairman Laura M Cha being interviewed at the World Economic Forum in Davos.
Chief Executive Charles Li speaking during the ‘Hong Kong Night’ in Davos.
Charles Li (left) and Laura M Cha (right) celebrating the first trading day of the Year of the Rat.
Charles Li (left) and Laura M Cha (right) striking the gong to mark the 20th Anniversary of HKEX.
Charles Li speaking at the HKEX Biotech Summit.
Charles Li speaking to journalists virtually ahead of his retirement from HKEX.
* As of 10 December 2020
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.