While many brokers are unhappy with the government's choice of former MTR Corporation chief executive Chow Chung-kong as the next chairman of Hong Kong Exchanges and Clearing (HKEx), they are picking on the wrong target.
They should not care that Chow has no experience in exchange affairs, but rather ask why the government chose the HKEx chairman.
Chow is someone with leadership experience. He has held senior jobs in Britain and Australia and headed the railway firm for eight years, during which he successfully led the merger of the MTR's railway operations with those of the Kowloon-Canton Railway Corporation. It makes sense for him to help HKEx, which is preparing a bid for the London Metal Exchange.
The major problem is with how the stock exchange's chairman is selected. If it operated like any other listed company, we would not know who will succeed Ronald Arculli as chairman when he steps down on Monday at HKEx's annual general meeting. We would have to wait until the company's board meeting the following day, at which its chief executive, Charles Li Xiaojia, will ask directors to nominate candidates for the role of chairman, then decide by vote which of these gets the job.
But already last week it was known that the government had chosen Chow. This means next week's board meeting is just a show.
The reason HKEx is not like other listed companies lies in the laws of Hong Kong, which state that it shall have 13 directors - the chief executive plus six government-appointed directors and six chosen by shareholders. This means that, even if the shareholders favour a candidate and urge all six of the directors they chose to vote for that person, he or she would inevitably lose out to the government's choice, who would have the backing of the chief executive and the other six board members.