New HKEx chairman faces merger and quality issues

PUBLISHED : Wednesday, 25 April, 2012, 12:00am
UPDATED : Wednesday, 25 April, 2012, 12:00am


Chow Chung-kong, who was elected chairman of the city's stock exchange yesterday, is expected to focus on a probable takeover of the London Metal Exchange (LME) and to improve the quality of new listings.

Chow, 61, the CEO of MTR Corporation for the past eight years, was unanimously elected by the 13 board members of Hong Kong Exchanges & Clearing (HKEx) for a two-year term with an annual pay of HK$900,000.

He replaces Ronald Arculli, who stepped down after a maximum term of six years in the job. Though Chow was the government's favoured candidate, some stockbrokers said he lacked experience in the financial sector.

At a short media briefing, Chow said his first task as chairman was to 'learn about the operation of the exchange', adding that his experience in leading listed firms for 15 years and his stints overseas would be useful.

'The HKEx board has experts in different fields, including many who know the financial markets well,' Chow said. 'My expertise is management and fund-raising. The board will work together to lead the exchange to strengthen its international role.'

Brokers say one of Chow's key challenges is HKEx's likely acquisition of LME, while industry insiders say HKEx is bidding for LME as part of its plan to expand its global presence and branch out into commodities trading.

Another major task for Chow is to boost the quality of new listings. At the exchange's annual general meeting on Monday, small shareholders grilled HKEx directors about various firms that were found to have misled investors in their prospectuses.

For instance, clothes maker Hontex International was suspended from trading in March 2010 just three months after its listing, as the Securities and Futures Commission said it had used its listing documents to mislead investors. HKEx's new chairman also needs to address the competition from electronic trading platforms, such as so-called dark pools that are gaining popularity among investors, as they allow them to trade without disclosing prices, volume or identity.

In recent months, the exchange's turnover has fallen to about HK$50 billion, down from an average of about HK$70 billion in the past two years.

In 2007, Chow led the MTR's merger with the century-old Kowloon-Canton Railway Corporation. Chow has also been in senior management positions in Britain and Australia.