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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Hong Kong Exchanges and Clearing Limited    388   HK0388045442

HONG KONG EXCHANGES AND CLEARING LIMITED

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Hong Kong lines up MSCI derivatives launch amid doubts on city's future

05/27/2020 | 05:47am EST
Illustration photo of the MSCI logo

By Alun John and Tom Westbrook

Hong Kong's exchange is launching derivatives with index provider MSCI in a deal that hurts rival Singapore and boosts its global appeal amid U.S. warnings that Chinese pressure on the city's autonomy threatens its future as a financial hub.

The announcement comes days after China's National People's Congress said it would impose new national security legislation on Hong Kong, which U.S. government officials have warned could bring into question the city's special economic status under U.S. law. [ nL4N2D32O6]

On Tuesday, White House spokeswoman Kayleigh McEnany said president Donald Trump had told her "it's hard to see how Hong Kong can remain a financial hub if China takes over."

Hong Kong Exchanges and Clearing Ltd said on Wednesday it will launch Asia and emerging markets futures and options contracts under a licence deal with MSCI Inc.

That will end a current arrangement where the contracts trade in Singapore, pushing Singapore Exchange Ltd shares 11.6% lower in their biggest daily drop in more than 16 years. HKEX shares rose 0.15%. The broader market dipped.

"What we saw in Hong Kong exchanges was a larger customer base, particularly the access to Chinese institutional and retail investors, said Henry Fernandez, Chairman and Chief Executive Officer at MSCI. "We also saw the ability to have a large market for index options and that market is the gateway to structured products."

SGX said in a separate statement that it would not renew its licensing agreement with MSCI when it expires in February 2021, other than for the MSCI Singapore index.

The Singapore bourse said that the loss of the contracts could hit its 12-month net profit by 10-15%.

Fund managers at Aberdeen Standard investments, which holds shares in both bourses, said the move is also a blow to Singapore's position as a one-stop shop for derivatives trade, while a positive for Hong Kong's prospects.

"The potential boost to derivative trading volumes would not only increase HKEX's revenues but also help it diversify away from its main cash equities business," said Elizabeth Kwik, Asian equities investment manager at Aberdeen.

INTERNATIONAL AMBITIONS

HKEX Chief Executive Charles Li said that international and Asia-focused products were a "key missing part of the puzzle" for HKEX, as investors typically came to the bourse to trade HK and mainland China linked products.

Li denied that there was any political aspect to the announcement.

"This is a commercial arrangement that has its own timing and its own processes. We are not coinciding with anything ... politics comes and politics goes," said Li.

He said that he did not see recent political developments having any effect on "Hong Kong's unique position as a connector".

The Hong Kong bourse, which bought the London Metal Exchange in 2012 and failed in a bid for the London Stock Exchange last year, said in its 2019 three-year strategic plan that it wanted to diversify the range of products it offers, which have typically focused on its China links.

The new contracts, which will use the MSCI Emerging Markets Asia, MSCI China Free, MSCI Singapore and MSCI India indices, among others, are subject to local regulatory approval.

(Additional reporting by Anushka Trivedi in Bengaluru and Anshuman Daga in Singapore; editing by Muralikumar Anantharaman and Jason Neely)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ABERDEEN INTERNATIONAL INC. -5.56% 0.17 Delayed Quote.17.24%
ACCESS CO., LTD. 1.83% 777 End-of-day quote.5.71%
BASE CO., LTD. -2.47% 5920 End-of-day quote.-3.74%
BASE,INC. 1.35% 13560 End-of-day quote.38.93%
HONG KONG EXCHANGES AND CLEARING LIMITED 8.33% 553 End-of-day quote.30.12%
HUB CO., LTD. 2.81% 622 End-of-day quote.14.76%
JASON CO., LTD. -0.61% 654 End-of-day quote.-2.10%
LONDON STOCK EXCHANGE PLC 0.91% 9113.475 Delayed Quote.0.27%
MSCI CHINA (STRD, UHD) 2.89% 124.689 Real-time Quote.11.78%
MSCI EM (EMERGING MARKETS) (STRD, UHD) 1.25% 1410.2 Real-time Quote.7.87%
MSCI, INC. -2.04% 403.49 Delayed Quote.-9.64%
SINGAPORE EXCHANGE LIMITED -0.40% 10.05 End-of-day quote.8.30%
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Financials
Sales 2020 18 791 M 2 424 M 2 424 M
Net income 2020 11 643 M 1 502 M 1 502 M
Net cash 2020 102 B 13 137 M 13 137 M
P/E ratio 2020 62,2x
Yield 2020 1,43%
Capitalization 699 B 90 214 M 90 222 M
EV / Sales 2020 31,8x
EV / Sales 2021 27,2x
Nbr of Employees 2 182
Free-Float 94,0%
Chart HONG KONG EXCHANGES AND CLEARING LIMITED
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Hong Kong Exchanges and Clearing Limited Technical Analysis Chart | 388 | HK0388045442 | MarketScreener
Technical analysis trends HONG KONG EXCHANGES AND CLEARING LIMITED
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 438,28 HKD
Last Close Price 553,00 HKD
Spread / Highest target 3,98%
Spread / Average Target -20,7%
Spread / Lowest Target -48,1%
EPS Revisions
Managers and Directors
NameTitle
Chi Kin Tai Co-President, Chief Executive & Operating Officer
Romnesh Lamba Co-President
May Lung Cha Non-Executive Chairman
Vanessa Lau Group Chief Financial Officer
Chung Kwong Leung Group Chief Technology Officer
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1st jan.Capitalization (M$)
HONG KONG EXCHANGES AND CLEARING LIMITED30.12%90 214
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NASDAQ7.20%23 343
B3 S.A. - BRASIL, BOLSA, BALCÃO-5.53%21 625