Hong Kong’s stock market is on a losing streak. The Hang Seng Index, the benchmark that tracks the largest companies on the city’s stock exchange, has dropped for four straight years. But the head of the city’s exchange believes that Hong Kong’s relationship with China—often blamed for the slowdown—will be what returns it to growth.

Chan blamed Hong Kong’s decline in the last few years, at least in part, on a short term banking issue—tighter monetary policies—as capital markets tend to struggle in high interest rate environments. But Chan said Hong Kong’s role as a super-connector between China and the outer world means there will be opportunities again in the long-run.

“I won’t be able to tell you whether they’ve touched bottom or not,” said Bonnie Chan, the new CEO of the Hong Kong Exchanges and Clearing (HKEX), at the Fortune Innovation Forum in Hong Kong on Wednesday. “[There are] a lot of challenges in front of us, but at the same time I see even more opportunities.”

Hong Kong as a super-connector

“The very basics of an exchange is connecting capital with opportunities, so whoever has the money with whoever needs the money,” Chan said, adding that Hong Kong still functions, as it traditionally has, as the gateway to the Chinese market.

That plays in Hong Kong’s favor because China still has a lot of growth potential over the long-term, Chan said, citing Beijing’s 5% growth forecast for this year. That’s less than the 7.7% annual growth it averaged in the decade before the pandemic, but Chan reminded the audience that 5% growth is still a huge number for the world’s second largest economy.

Similarly, Chan noted that the drop in initial public offerings Hong Kong experienced last year was not significant when comparing it to 2022 numbers. (There were 73 IPOs in 2023 and 90 in 2022). Chan admitted the drop in funds raised was significant, but noted that the plunge in valuations was worldwide.

This too, Chan said, would turn around soon.

“There are just so many exciting companies trying to figure out new products, come up with new inventions, and this will be a very strong supply of issuers down the road,” Chan said. 

One way Chan said Hong Kong’s exchange is looking to boost its listings is to increase its interactions with other exchanges. She said HKEX has signed memorandums of understanding with several exchanges in Southeast Asia and also has an office in Singapore. 

All these efforts, Chan says, are to ensure that Hong Kong is considered when companies are thinking of doing a second listing or a dual primary listing. She notes that companies in recent years have chosen to list on domestic exchanges, and suggested that rising nationalism and COVID controls on travel could be the cause.

But eventually these firms will need to tap deeper markets like Hong Kong, Chan predicted.

Who is Bonnie Chan?

Bonnie Chan was appointed as HKEX’s CEO on March 1, taking over from Nicolas Aguzin.

Chan is the bourse operator’s first woman CEO, after serving as the company’s co-chief operating officer at HKEX. Her ascension to the top job comes as the company is pushing for better gender representation at public companies. In 2022, HKEX mandated that all listed companies must stop having single-gender boards by the end of 2024. Candidates for new listings must also have at least one woman director.

“When we introduced that rule, the number was standing at around 800 companies with same gender boards. That was about a year ago. By now the number is slightly below 500,” Chan said. She added that the number will drop even further as companies move into annual general meeting season in April and May.

HKEX has yet to decide how to punish companies that have not complied with the exchange’s directive to diversify their board by the end of the year, Chan said. At the very least, there could be some “naming and shaming,” which could dissuade big investment funds that now focus on policies such as diversity.

Hong Kong is behind other financial hubs when it comes to gender diversity on corporate boards. Earlier on Wednesday, at a Most Powerful Women breakfast session at the Fortune Innovation Forum, Chan suggested that Hong Kong’s slow progress was due in part to the city’s large number of family-owned companies, which are traditionally slow to embrace gender equality. “In Chinese tradition, we always favor the son,” she said.

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