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RIDING THE CHINA WAVE – HKEX’S GROWTH STRATEGIES IN THE EXCHANGES ARENA

Reference No. 16/016C Publication Year 2016
Author(s) Amy Yip, Roy Zhou
Company Hong Kong Exchanges and Clearing Limited (“HKEx”)
Industry Banks and Diversified Financials
Geographic setting Hong Kong; Mainland China
Functional Area Strategy and General Management; Economics and Business Policy; Finance and Investments

Synopsis

While the opening up of China’s capital market has accelerated in recent years, Hong Kong Exchanges and Clearing Limited (“HKEx”) found itself in the unique position of being able to contribute to the development of cross-border access platform. The widely anticipated Shenzhen-Hong Kong Stock Connect (“SZ-HK Connect”) in 2016 is the next key development after HKEx introduced the first mutual access programme, the Shanghai-Hong Kong Stock Connect (“SH-HK Stock Connect”) in 2014.

HKEx positioned itself as a bridge between Mainland and international markets. Could this vision drive HKEx to enhance its competitiveness in helping channel funds into and out of China, and consolidate its leading position in the global exchange arena? Strategies were formulated to diversify into commodities and to launch mutual access programmes. Would such strategies enable HKEx to fulfil its ambition of building a robust RMB ecosystem?

Learning Objective

This case describes how HKEx has capitalized on the opportunities that have arisen from the gradual but accelerating opening up of China’s capital market. Students will be required to evaluate HKEx’s moves of diversifying into commodities market and launching the mutual access programme. Students will also discuss HKEx’s strategy in building an offshore RMB ecosystem with a suite of RMB-denominated products. 

Suggested Questions:

1. Evaluate HKEx’s diversification strategy into the commodities market.

2. How does the SH-HK Stock Connect work? What benefits does it bring to retail investors and the two markets?

3. How is the launch of RMB products relevant to HKEx’s vision of becoming China’s premier wealth management centre? 

 

This case was fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (UGC/IDS12/14).