Bank studies investment hopes
Hong Kong Exchanges and Clearing has appointed JP Morgan Chase to review potential investment opportunities, sources said yesterday.
The investment bank would study whether the exchange should use part of its HK$5.27 billion shareholders' fund to invest in overseas markets, either in stock exchanges, electronic trading platforms or clearing houses, the sources said.
The exchange now invests the fund in bank deposits or bonds. The low interest rate environment has hit returns, prompting the exchange to seek better investment opportunities.
An exchange source said HKEx had appointed other investment bankers to study investment opportunities in the past two years without success.
'The HKEx will invest in a project only if we consider it would help improve the reputation of the local market internationally,' the source said.
Brokers have called for the HKEx to consider acquisition opportunities on the mainland but the HKEx source said this would be difficult as China had not yet opened up ownership of its exchanges.
The source said HKEx was targeting large international exchanges, electronic trading platforms or clearing houses.
'The HKEx's eyes are on the large players. It would not help the HKEx improve its international exposure if it acquires stakes in small exchanges,' the source said.
'To purchase stakes in the international big players would enhance the status of the Hong Kong stock market. It will also help the HKEx build up alliances with overseas markets.'
Although some legislators and brokers consider the HKEx can build alliances without buying stakes in other bourses, the exchange source said it preferred to invest in ownership of other exchanges or clearing houses.