Macau approves asset exchange backed by former HKEX boss Charles Li as it diversifies economy

Micro Connect (Macau) Financial Assets Exchange, a new blockchain platform, will allow small Chinese companies to raise funds from international investors
Charles Li is a veteran whose experience will be helpful for establishing an exchange in Macau, analyst says

Macau

Enoch Yiu

Published: 9:20pm, 5 Dec 2022

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Macau has approved a new asset-exchange platform backed by Charles Li Xiaojio, the former CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX), in the latest sign that the former Portuguese colony is diversifying its economy to cut reliance on gaming and tourism.

Micro Connect (Macau) Financial Assets Exchange, a new blockchain platform, will allow small Chinese companies to raise funds from international investors, it said on Monday.

The exchange was established through an executive order signed by Macau Chief Executive Ho Iat-seng on November 30, but the government only disclosed it on Monday on its website. The exchange has a paid-up capital of at least 120 million patacas (US$15 million) and will be regulated by the Monetary Authority of Macau.

“We are excited about launching this new exchange and developing a more inclusive and sustainable financial market,” said Li, who is the founder and chairman of Micro Connect, which is the new exchange’s holding company. “The exchange will be at the core of our Micro Connect market ecosystem. A platform that will offer liquidity and price discovery for a new asset class, to enable investors to deploy capital more efficiently.”

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Micro Connect’s exchange is the second to be approved by Macau, after Chongwa (Macau) Financial Asset Exchange founded by Namkwong (Group) was established in August 2018 to provide bond offerings. It also comes after Beijing announced a raft of policies in December 2019 aimed at diversifying Macau’s economy by building its financial services industry.

A core part of the measures announced was the establishment of a Nasdaq-like stock exchange trading in the yuan, but no launch date has been set for this exchange.

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Micro Connect said the new exchange “plans to provide services related to the trading of other financial assets and economic entitlements in the private markets” and “connects China’s micro economy with global capital while offering new investment opportunities to global investors”.

Micro Connect was launched in Hong Kong in August last year by Li and financier Gary Zhang. It offers funding to small businesses that fail to get bank loans for expansion. International investors have, via Micro Connect, given about 494 million yuan (US$143.7 million) to more than 1,200 businesses as of September, beating the firm’s target of signing up 1,000 clients by the end of this year.

Some 40 million small and medium-sized enterprises and 90 million self-employed individuals require financial support in mainland China, according to central government data.

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“Charles Li is a veteran exchange operator, whose experience will be helpful for establishing an exchange in Macau,” said Louis Tse Ming-kwong, managing director at Wealthy Securities. “The new exchange will help Macau diversify its economy, which currently relies heavily on casinos.”

Li, 61, headed HKEX for 11 years before stepping down in December 2020.

Macau’s push into the financial services sector comes at a time when its casinos are set to rake in their lowest revenue on record this year, as China’s Covid-19 policies continue to keep visitors from the gaming hub.

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