Hong Kong exchange thinks it has a shot as world’s fundraising hub, tapping China’s trillions in savings. Does it?

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In its three-year strategic plan, the HKEX is tapping a wider range of financial products to widen its lead over rival exchanges, and to transform from a regional course into a global financial market place

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A ceremony at the Hong Kong Exchanges and Clearing Limited (HKEX) to usher in the first trading day of the Lunar New Year on February 8, 2019. Photo: Xinhua

Laura HeandEnoch Yiu

Published: 8:04am, 9 Mar 2019Updated: 11:13am, 11 Mar 2019

Hong Kong Exchanges and Clearing Limited (HKEX) may be on the verge of a breakthrough innovation in its transformation from a regional bourse into a global financial market place.

The operator of Asia’s third-largest stock market, which gets 61 per cent of its revenue from equity-related trading, 19 per cent from futures and 17 per cent from its stake in the London Metal Exchange (LME), is looking at the potential of turning data into a new asset class that can be bought and sold in a financial market place.

“In the age of data and AI (artificial intelligence), automated financial exchanges will seriously have to consider the prospect of data becoming a new asset class for the financial market,” said chief executive Charles Li Xiaojia, during an interview with South China Morning Post. “Data sharing, trading and monetisation are going to increasingly become a key part of our lives, because data will generate tremendous value when properly shared and used together, rather than in isolation.”

The use of data, outlined last week in the exchange’s three-year strategic plan, is an extension of the HKEX’s embrace of technology since its 2018 overhaul of listing regulations to help new-economy start-ups and biotechnology raise capital. The listing reforms – which allowed tech companies with multiple classes of shares and pre-revenue biotech firms raise funds – attracted 218 companies to raise HK$288 billion (US$36.7 billion) in Hong Kong last year, propelling the city to the top of the global ranking for initial public offerings (IPO) for the sixth year in a decade.

The exchange will also double down on its advantageous position as the offshore financial hub for the world’s second-biggest economy, as it widens several so-called Connect schemes to let more capital flow into and out of the Shanghai and Shenzhen exchanges via Hong Kong.

More financial instruments and options will be on offer for investors, including exchange-traded funds (ETFs), as well as contracts in ferrous and rare metals, and currencies, according to Li’s plan.