Hong Kong Stock Exchange

HKEx chief confident of taking over LME

PUBLISHED : Tuesday, 08 May, 2012, 12:00am
UPDATED : Tuesday, 08 May, 2012, 12:00am


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The chief executive of the Hong Kong stock exchange says he is confident about its chances of acquiring the London Metal Exchange.

Hong Kong Exchanges and Clearing is one of the four shortlisted bidders for the world's largest trading platform for metal futures contracts, media reports say.

Once it made a successful bid, HKEx would help link up the exchanges on the mainland with their international peers, Charles Li Xiaojia, HKEx's chief executive, said on the sidelines of its quarterly results news conference yesterday.

'All of the potential bidders are the leading exchanges in the world, signalling that all of them share the same view with us,' Li said.

Media reports suggested that the acquisition of LME would cost up to US$1.6 billion. HKEx's market capitalisation is US$17 billion. Li (pictured) said he would consider all types of funding for the potential merger.

HKEx's net profit fell 7 per cent to HK$1.15 billion in the first quarter, while revenue dipped 2 per cent to HK$1.88 billion.

The company's share price fell 1.93 per cent to HK$121.70 yesterday, its lowest level this year.

'The global economic and political uncertainties persisted in the first quarter, and investors' confidence remained subdued,' HKEx's recently appointed chairman, Chow Chung-kong, said. 'Hong Kong, as an international financial centre, could not [escape] from the whirlpool of instability. The unclear economic and geopolitical backdrop will continue to raise challenges and cast shadows over the remainder of 2012.'

During the first quarter, the average daily turnover in the cash market fell 17 per cent and the average daily number of contracts traded in the derivatives market dropped 10 per cent, Chow said.

Over the three-month period, 18 companies listed on the exchange, raising HK$9.8 billion, Li said.

These included Canadian company Sunshine Oilsands, which raised HK$4.5 billion. In the secondary market, the average daily turnover by value was HK$63.2 billion in the first quarter, a 7 per cent increase from the preceding quarter, he said.

'Significant progress was made in the five months after the BRICS Exchanges Alliance was formed in October last year,' Chow said.

On March 30, the stock exchanges of five jurisdictions - Brazil, Hong Kong, India, Russia and South Africa - implemented the first phase of their alliance by cross-listing their benchmark equity index derivatives on each another's exchanges.

This move gives Hong Kong investors greater exposure to the other BRICS economies and enables overseas investors to trade Hang Seng Index and H-share index futures, Chow said.

'Although we expect a slow ramp-up of trading in the new products initially, the cross-listings were a big step for the BRICS Exchange Alliance and will pave the way for more collaboration to expand alliance members' products overseas, including new equity index-related products representing the BRICS economies,' Li said.