Who is the real outsider in the Hong Kong Exchanges and Clearing director election?
In the outsider versus insider battle for the empty board seat at Hong Kong Exchanges and Clearing (HKEx), the divisions are blurred and the rhetoric sharp.
As London-based metal firm Metdist head Apurv Bagri and Hong Kong-based hedge fund manager Edward Chin Chi-kin square off for the seat in the coming annual general meeting due April 28, Bagri seems the obvious outsider as it would be the first time someone based outside Hong Kong and from the metal trade would make it to the board if he gets past the post. But the board thinks otherwise, having just issued a circular urging shareholders to vote for him.
Chin, on the other hand, is from Hong Kong but his politics makes him an uneasy fit for the board of a major institution in a city where the business elite likes to steer clear of politics. An open supporter of the Occupy Central movement in 2014, Chin is still active in politics.
Oscar Wong Sai-hung, whose retirement created the vacancy that Bagri and China are trying to fill, has extended his support to Chin. But independent advisory firm ISS, like HKEx, is recommending investors to vote for Bagri.
HKEx chairman Chow Chung-kong has said HKEx is supporting Bagri because none of the existing 13 board members have any experience in metals or commodities trading. In 2012, HKEx spent £1.38 billion (HK$15 billion) to buy the London Metal Exchange, in its first step to expand into commodities.
Chin told the South China Morning Post that he has no intention of bringing any political agenda to HKEx.
“Over a million people supported Occupy Central, and I do not think the HKEx urged shareholders to vote against me for political reasons. I believe it’s more likely that the HKEx board members want people with similar views to join the board, and I am obviously not one of those.”
But he finds HKEx’s call to shareholders unfair. “It should treat all candidates equally. If HKEx wants a metal trader to join the board, why not just ask the government to appoint one? It should be the shareholders who decide what they want,” Chin said.
“I am running for the post to bring in a fund manager’s voice. I want to see HKEx launch products for fund managers. I would be truly independent if l were elected as a HKEx director. I believe I can protect the interest of minority shareholders. By asking shareholders to vote against me, the HKEx board has shown that it does not want any independent voice on the board.”
His rival stressed his metals credentials for the job. “I am confident my experience, strong ties with the London Metal Exchange and knowledge of the commodities business, from trading to the needs of end users, will enable me to bring value to the HKEx board if I am elected,” he told the Post in a written reply.
Bagri said he has been deeply involved in the LME markets and all aspect of metal trading since 1980 and hence has knowledge in LME derivatives, warehousing, physical metal markets and logistics, along with excellent relationships across all key market sectors.
But Chin believes his fund management experience is more relevant to HKEx. “The key to profit generation for HKEx is the trading volume of the cash and derivatives markets, not commodities,” he said.
“I am confident I can add value as the HKEx works to develop its planned physical commodities platform in China, which has the potential to become a key growth area,” countered Bagri. “As China continues to open up as a result of regulatory changes and the internationalisation of the yuan, the importance of global commodities markets to China will unquestionably increase.”