The Hong Kong Stock Exchange held the hk EX Connect Summit Monday to mark the tenth anniversary of the city's cross border stock link. For more on the celebration, Bloomberg Steven Engel spoke with hk EX CEO Bondi.
Chin on a very momentous occasion, the tenth anniversary. Well, yesterday was I believe of the stock connect program Shanghai first and shen Jen a couple years later, obviously resounding success according to your assessment, surely, but there's room to grow. How would you say from that tea house meeting between Charles Lee of the hk EX and also I believe the Shanghai Boyds chairman back in twenty twelve, that would grow to this size.
Yeah, thank you, Steve. And it's certainly a very momentous moment. Ten ten years of the connect story. I think we're still actually at the beginning. If you look at the volume so far from the very beginning, southbound traffic has actually grown fifty times, and no found traffic has also grown twenty five times. And this is quite amazing. And if you ask me how we're going to continue to expend it, I'll say three ways that we're going to do it. First of all, products, we need to put
a more products onto the shelf. As you know, we started with stock and then we expanded it to include bonds ETFs. We're going to soon have reads.
But there is Can I jump in and say there's no date.
Yet, Well, we're working on the details. I mean, certainly with every enhancement, we need to make sure that you know, all the screws are tieden up, uh and there is still a lot of a lot of white space that we can fill in. So that's the first dimension. Secondly, the micro infrastructure, which is very important. We need to make sure that the users of the Connect franchise have
a good experience. And I think you know, very recently we've proven that with micro infrastructure changes, the market can be greatly enhanced severe weather trading as an example. I think we've proven to the world that you know, Hong Kong as a market has stepped up to that moment. And then third, but not you know, the last it's the fact that at the moment, you know, the participants,
I think it's still a relatively small pole. I've been traveling a lot recently and I would say that you know, the Connect story is still pretty novel to a lot of our friends in the world, and so I'm going to go out there and continue to market the Connect story.
You've traveled a lot. You've been obviously to Riad, You've been back and forth to Shanghai and Beijing. You just came back from Lima. Apeg that's right. What was the key takeaway there? Before we get into these steps, we need to talk about primary connect and the other things that have been promised but have not delivered. But what did you what was your key takeaway quickly on Apec?
Okay, so my first takeaway from APEC is that I'm very happy to see that countries are still very willing and keen to make friends with one another. So, you know, while I hear a lot about you know, geopolitics and all that and how it's going to jump down markets, what I saw on Lima is quite the contrary. So that is a big encouragement. And secondly, the reason why I'm traveling so much is really to get you know, the story of Hong Kong and connect out to the
rest of the world. You know, in this region, I think a lot of people understand, you know, the impact of Connect and what it brings in terms of enhancing the two way capital flows between China and the rest of the world. But a lot of you know, the rest of the world, it's still you know, learning about it, and so it's important for that kind of engagement.
Would you say the Connect program still though, has its training wheels on. I mean there's a bit of shackles and there's been promises to grow it. Primary Connect is the big one, obviously. Charles Lee back in twenty seventeen said this is the next big thing, right, This market's been waiting for that. Chinese investors have been waiting for this to get these primary listings into the stock Connect some would say that it held back a Ramco from even thinking about Hong Kong.
Well, it's very interesting you talk about, you know, how
everyone is waiting for it. I think that basically showed that, you know, the Connect franchise has a lot of promise, and in fact, I think the eagerness really stems from the fact that a lot of investors around the world want to take advantage of the growth of the China market, both in terms of what corporates it's turning out right, those are great investment opportunities as well as the investor base that China as a country is capable of providing
the world. So my duty, my responsibility running the change is really to continue to build it with those three dimensions I just mentioned.
Sure, so Northbound has been pretty fruitful for international exposure into China. I think over the past decade foreign holdings of Chinese stocks have jumped more than twenty four But this primary connect would allow mainland investors to come in and participate in what used to be the one of the hottest IPO markets in the world. Right, So what's holding it back?
Oh? Well, okay, so you're absolutely correct that there is a lot of interest. In fact, if you think about the reason Raley, we had at the end of September and early October, we saw a very big jump in terms of self bound flow, and I think that illustrates the fact that, you know, there's a lot of accumulation of wealth in the mainland, a very fast growing middle class, and they're looking for diversification, right, And therefore I think what we have to do at HKIX is really to
continue to build primary connect. I know is something that a lot of people talk about but that's not the only thing. We have a long list of to do for how we're going to continue to develop the Connect franchise.
Okay, what's holding it back? Though I know you can't really I'm getting a sense you can't really tell me. I mean, where are we in the dialogue with Beijing? Because I know they're worried at a during a slowing economy, They're worried about outflows.
Obviously, So I think everything has its moment and to make sure that it's successful, you want to capture the best moments, right So, Ipeel, you know you're very focused on it. I can see the world has gone through a couple of years with relatively muted IPO activities. We are very happy that we're seeing a strong pickup in the Hong Kong market, and therefore, you know, I think we just need to continue to build on that and make sure that in fact, the strength of the IPO
market returns. And I think with a stronger base and you know, a more robust pipeline, the conditions will be riper.
Okay, So right now that the conditions are not necessarily right, we raised about nine billion this year, I believe five and a third billion last year, so it's better than last year, but it's way off of twenty twenty. Was it twenty there was fifty three billion or something like that, So you have a ways to go. So again I'm going to come back to the primary connect. Is it on the docket for next year?
Okay? So let's talk about where we are in terms of the IPO activities. And I'm very happy to report it because last time we spoke, I think, you know, in terms of our league table ranking, we are a little bit bit sort of at the bottom.
Of the top ten.
Shore we say we're now and we have completed a very big IPO idea, which is a four point six billion US IPO, the second largest in the world this year and the largest in the consence. Yeah, since February twenty twenty one.
As Holdings possibly too.
I think they are about to launch.
They just announced that they've been Bard approval.
Going hopefully to bring our total fundraise this year to above ten billion US, which I understand, right, compared to previous years, it's you know, a little bit, you know, sort of slower. However, I think you know, you need to look at the relative ranking and for the rest of the world. You know, the last two years have not been a particularly conducive year of IPO activities, but you know, I think we've reached a pivot point and I'm certainly seeing momentum pickup.
So if there's not a deliverable on these other initiatives, including what reads was announced earlier this year in April, we don't have a date for the beginning of that inclusion into the So.
A lot of enhancements have been announced as you know. So besides read Way, we also have we also have self bound R and B counter which is in the works. And like I said earlier, with all those you need to make sure that the plumbing works, and we're working together with our friends on the mainland to make sure that you know, all the system upgrades, all the infrastructure are built in in a way which you will make sure that the rollout is very, very smooth.
Last November we also got an announcement that there would be trading in treasury bond futures. We don't have any start data that as well. Do you have any update for it?
Well, I don't you know, Okay, I'll give you the same answer. Right. We have been working on the technical aspects to make sure that you know, the rollout will be smooth, and I don't worry about sort of not having a date because as you can see right, you know, recently we've seen a lot of measures being announced by Beijing and all that have a very huge impact in
the market. Right you saw the rally and early October, end of September, early October, and therefore I really don't worry about, you know, seeing all these positive momentum build up. In fact, you know, we just need to make sure that you know, there is a way to be ready for it, and not just being technical ready. The market also needs to be ready for it.
I had to ask you what do you think is going to be the Trump effect on the Chinese economy and how that equates to capital raising, potential action against China and the dampening effect possibly on the market here.
Okay, I know that question will come now to me. What we saw is that the week leading to the US presidential election and the training volume actually is softened a little bit in our market. But as soon as the election is over, we saw the volume got back up again. So I think, you know, with the presidential elections now behind us, there is now sort of the market knows how to move on, which is a good thing to me. You know, this is not the first
time US has Trump is the president. We've gone through that. What our market has continued to prove is that, you know, whatever the conditions are, we have that resilience to make sure that we can write the tide.
That was h k e X CEO Bonnie Chan speaking with Bloomberg's Steven Engel.