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Hong Kong\u2019s stock market is on a losing streak. The Hang Seng Index, the benchmark that tracks the largest companies on the city\u2019s stock exchange, has dropped for four straight years<\/a>. But the head of the city\u2019s exchange believes that Hong Kong\u2019s relationship with China\u2014often blamed for the slowdown\u2014will be what returns it to growth.<\/p>\n Chan blamed Hong Kong\u2019s decline in the last few years, at least in part, on a short term banking issue\u2014tighter monetary policies\u2014as capital markets tend to struggle in high interest rate environments. But Chan said Hong Kong\u2019s role as a super-connector between China and the outer world means there will be opportunities again in the long-run.<\/p>\n \u201cI won\u2019t be able to tell you whether they\u2019ve touched bottom or not,\u201d said Bonnie Chan, the new CEO of the Hong Kong Exchanges and Clearing (HKEX), at the Fortune Innovation Forum in Hong Kong on Wednesday. \u201c[There are] a lot of challenges in front of us, but at the same time I see even more opportunities.\u201d<\/p>\n \u201cThe very basics of an exchange is connecting capital with opportunities, so whoever has the money with whoever needs the money,\u201d Chan said, adding that Hong Kong still functions, as it traditionally has, as the gateway to the Chinese market.<\/p>\n That plays in Hong Kong\u2019s favor because China still has a lot of growth potential over the long-term, Chan said, citing Beijing\u2019s 5% growth forecast<\/a> for this year. That\u2019s less than the 7.7% annual growth it averaged in the decade before the pandemic, <\/strong>but Chan reminded the audience that 5% growth is still a huge number for the world\u2019s second largest economy.<\/p>\n 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<\/a> in 2023 and 90 in 2022<\/a>). Chan admitted the drop in funds raised was significant, but noted that the plunge in valuations<\/a> was worldwide. <\/p>\n This too,\u00a0Chan said, would turn around soon.<\/p>\n \u201cThere 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,\u201d Chan said.\u00a0<\/p>\n One way Chan said Hong Kong\u2019s 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.\u00a0<\/p>\n 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.<\/p>\n But eventually these firms will need to tap deeper markets like Hong Kong, Chan predicted. <\/p>\n Bonnie Chan was appointed as HKEX\u2019s CEO on March 1, taking over from Nicolas Aguzin.<\/p>\n Chan is the bourse operator\u2019s first woman CEO, after serving as the company\u2019s 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<\/a> must stop having single-gender boards by the end of 2024. Candidates for new listings must also have at least one woman director. <\/p>\n \u201cWhen 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,\u201d Chan said. She added that the number will drop even further as companies move into annual general meeting season in April and May. <\/p>\n HKEX has yet to decide how to punish companies that have not complied with the exchange\u2019s directive to diversify their board by the end of the year, Chan said. At the very least, there could be some \u201cnaming and shaming,\u201d which could dissuade big investment funds that now focus on policies such as diversity. <\/p>\n 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\u2019s slow progress was due in part to the city\u2019s large number of family-owned companies, which are traditionally slow to embrace gender equality. \u201cIn Chinese tradition, we always favor the son,\u201d she said.<\/p>\n<\/div>\n\nHong Kong as a super-connector<\/h2>\n
Who is Bonnie Chan?<\/h2>\n