Hong Kong Exchanges and Clearing Limited (HKEX) has had a very busy 2021, reporting record nine-month results and trading volumes and further elevating its competitiveness and attractiveness as the region’s premier international financial market.
Whilst the ongoing Covid-19 pandemic continued to impact global economies, Hong Kong’s financial markets have remained vibrant, resilient, and robust, with average daily turnover in HKEX’s cash equities market rising 32 per cent from a year earlier, and average daily volume of HKEX’s derivatives market recorded a 3 per cent increase.
During the year, HKEX further expanded its product offering and strengthened its role as a gateway to China for global investors. Notable initiatives included Hong Kong’s first A-share derivatives product – MSCI China A 50 Connect Index Futures – which was introduced in October, becoming the best ever futures product launch for HKEX, and providing global investors and risk managers with a convenient and cost-effective solution to trade and manage their China exposure; and the launch of a cash-settled Mini USD/CNH Futures contract – a smaller-sized contract to complement the existing popular USD/CNH derivatives products, which further diversified HKEX’s suite of currency derivatives to support the risk-management needs of global investors. HKEX is now home to the world’s most complete and competitive offshore A-share equity and derivatives trading venue.
To bolster HKEX’s position as Asia’s derivatives trading hub, HKEX this year worked on a range of new market microstructure enhancements, including plans to launch holiday trading for non-Hong Kong dollar denominated futures and options products in 2022. This will enable investors to actively manage their derivatives portfolios during Hong Kong public holidays, when the markets of the associated underlying securities may be open.
On the IPO front, HKEX’s new listings market also had a robust year, with 92 listings raising HK$318.9 billion through 17 December, though the figures were down from a very strong 2020. During the year, we welcomed 54 new economy companies, including 32 healthcare and biotech firms, to our markets, accounting for 86.6 per cent of IPO funds raised in Hong Kong during the period.
Building on the success of the 2018 listing reforms, during the year HKEX has continued to make new enhancements to its listing framework, striking a balance between delivering appropriate investor protections and the promotion of market quality and market attractiveness. These efforts have helped to support Hong Kong’s reputation as a global listing venue of choice, whilst further broadening investment opportunities for investors.
In November, we announced conclusions to a consultation on proposals to enhance and streamline the listing regime for overseas issuers, while also expanding our secondary listing regime to welcome overseas-listed Greater China companies in traditional sectors to Hong Kong’s markets; and allowing eligible issuers to dual-primary list while keeping their existing weighted voting right or variable interest entity structures.
Last week, HKEX announced new rules to create a listing regime for special purpose acquisition companies (SPACs) that will take effect on 1 January 2022. The introduction of a Hong Kong SPAC listing framework will be another attractive route to listing in Hong Kong, allowing more companies in new and innovative industries from Greater China, Southeast Asia and beyond to seek a listing on HKEX, helping fuel the growth of the companies of tomorrow.
As the world embarks on its net zero journey, HKEX has this year remained focused on supporting the more than 2,500 listed companies on its market, with a framework and guidance for ESG disclosure, application and implementation, through amendments to its listing rules, guidance notes, and market education. During the year, we launched the HKEX ESG Academy, a new online platform to support, guide and educate listed companies and the broader business community in their sustainability journeys, and help them implement change for real impact. ESG Academy also includes a webinar series to inform on the latest sustainability and governance trends and share best practices on various ESG matters, including climate related topics.
HKEX has recently also published a Net-Zero Guide for listed issuers and other corporations looking for guidance and insight on charting their net zero carbon journey. We were also delighted to note that through STAGE, our multi-asset platform that encourages greater transparency, market education and stakeholder engagement in sustainable finance, we have launched a new service displaying Hong Kong-listed companies ESG metrics.
HKEX as a company was also proud this year to become a signatory to the Glasgow Financial Alliance for Net Zero (GFANZ) and the Net Zero Financial Service Providers Alliance (NZFSPA), as part of our commitment to the long-term sustainable development of global financial markets.
Looking to 2022, HKEX remains focused on successfully leveraging its strategic China-anchored advantage to capture further growth opportunities in the region and beyond.
HKEX Chief Executive Officer Nicolas Aguzin said: “Since joining HKEX, I have been focusing on a number of key strategic priorities including expanding our unique role as a capital raising centre, on developing Hong Kong as Asia’s preferred risk management hub, on growing our offshore China A-share ecosystem and on strengthening the overall attractiveness of our market. Highlights in the last six months in particular have been the notable success of our first-ever A-share futures product, and the recent announcement of our new SPAC regime tailored made for our markets and going live on 1 January 2022.”
“I am as excited about the opportunities for HKEX as I was when I first joined -- the road ahead for us, and for Hong Kong’s financial services industry, is full of possibilities. I believe HKEX is well positioned to play an increasingly important role in the fast-evolving, interconnected global capital markets of the future, by promoting better connectivity and understanding between companies and stakeholders across different countries and markets, funding the businesses of the future, creating jobs and supporting communities that shape our future.”
Mr Aguzin added: “On behalf of everyone at HKEX, I would like to express our appreciation and gratitude to all our customers, partners and stakeholders around the world for their continued support during a difficult year for many. We are proud that together we have continued to strengthen the robustness and competitiveness of Hong Kong’s financial markets and 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
- HKEX CEO Nicolas Aguzin joined on 24 May
- Record revenues and other income in Jan-Sept 2021, of $16.2 billion, up 15 per cent year on year
- Hong Kong’s first A-share futures product was launched in October
- HKEX invested in a minority stake in the newly-established Guangzhou Futures Exchange, the first-ever equity investment in a domestic futures exchange by a non-Mainland Chinese investor
- 21st Anniversary of HKEX as a listed company
- Celebrated the 7th anniversary of Shanghai-Hong Kong Stock Connect, the 5th anniversary of Shenzhen-Hong Kong Stock Connect and 4th anniversary of Bond Connect
Listing and IPOs
- Hong Kong continues to be one of the world’s most active IPO fundraising hubs, with over $318.9 billion raised through IPOs this year1
- 45 new listings under the pre-revenue biotech chapter, raising a total of $110.9 billion2 since the launch of the new listing regime in 2018
- Consultation conclusions on Special Purpose Acquisition Companies (SPAC) published
- Consultation conclusions on enhancing and streamlining the listing regime for overseas issuers published
- Consultation conclusions on Review of the Corporate Governance Code published, with the focus on enhancing listed issuers’ corporate governance and diversity practices
- Guidance on Climate Disclosures to facilitate TCFD-aligned reporting published
- Consultation conclusions on the Main Board Profit Requirement and review of Listing Rules relating to disciplinary powers and sanctions published
Innovation and Technology
- HKEX announced it would launch a new platform, FINI (Fast Interface for New Issuance) in the fourth quarter of 2022, to comprehensively streamline and digitalise Hong Kong’s IPO settlement process
- Launch of LMEpassport, an online service and centralised digital provenance register, which enables participants to disclose their metals’ sustainability credentials
- LME collaborating with Metalshub to establish an online base metals spot trading platform, starting with low carbon aluminium early next year, to help further its sustainability agenda functions, including deployment of AI and Robotics
Products and services
- HKEX welcomed the first Exchange Traded Fund (ETF) listings in Hong Kong and Shanghai under the new Hong Kong-Mainland ETF Cross-listing Scheme, in June
- Launch of a cash-settled Mini USD/CNH (US dollar/Offshore RMB) Futures contract -- a smaller-sized contract to complement the popular USD/CNH derivatives products, further diversifying HKEX’s suite of currency derivatives to support the risk-management needs of global investors
- In March, LME introduced a new electronic warranting process, meaning all LME warrants are now lodged and stored digitally. The new system has increased operational efficiency as warrants are lodged almost immediately, in addition to increasing the number of warrants that can be lodged at any one time
- LME launched six new cash-settled futures contracts in July, offering pricing and risk management solutions for metals that support the electric vehicle (EV) transition and circular economy
Market Operations
- Consultation on Derivatives Holiday Trading was published
- In 2021, the LME ran a discussion paper process on market structure, putting forward a set of proposals designed to enable it to modernise and adapt to emerging trends and evolving customer needs.
Corporate Social Responsibility and ESG
- HKEX joined the Glasgow Financial Alliance for Net Zero (GFANZ) and the Net Zero Financial Service Providers Alliance (NZFSPA)
- Practical Net-Zero Guide for Business (Net-Zero Guide) was published to help guide companies in developing a pathway to net zero
- HKEX signed a Memorandum of Understanding with Guangzhou Futures Exchange with the aim of supporting China to peak carbon emissions by 2030 and reach carbon neutrality by 2060
- HKEX Foundation launched the HKEX Impact Funding Scheme to support short-to-medium term local community projects run by local NGOs
- The LME donated US$1.7 million to two responsible sourcing charities – Pact and The Impact Facility. The donation will fund two distinct three-year projects designed to reduce the number of children working in mining across the African Copperbelt region
Awards and Accolades
- Best Structured Product & Derivatives Exchange awards from SRP
- Best Annual Reports Awards by Hong Kong Management Association
- Best Corporate Governance and ESG Awards by Hong Kong Institute of Certified Public Accountants
- HKEX Foundation received Benefactor of the Year Award and Partner of Charity Giving Award from The Community Chest of Hong Kong
- Other award information available on the HKEX Group website
Market Statistics for the period 1 January to 30 November 2021 is now available.
Please refer to the video highlights of the year.
Notes:
- As of 17 December 2021
- As of end of November 2021
