Charles Li hard act to follow at challenging time for city bourse

By any standard, Charles Li Xiaojia’s decade-long leadership at the Hong Kong stock exchange has been a success. Dubbed “Mr China”, he has helped internationalise the bourse by attracting foreign listings, was instrumental in implementing the Shenzhen and Shanghai Connect schemes to allow cross-border trading for stocks and bonds, and laying the groundwork for the home return of mainland tech giants that were first listed overseas.

However, this does not mean his successor will have an easy job. The rapid expansion of the bourse has raised issues about corporate governance, both within the exchange itself and in terms of the quality of new listings.

The leadership transition comes at a critical time as China’s economy slows and bilateral relations with the United States are at their worst in decades. Hong Kong is caught in the middle. As it is not only a key business hub of the region but also a financial centre of the country, the city is critical to China’s financial security under its “one country, two systems” governing principle.

Enforcing proper corporate governance standards, especially for newly listed companies, is therefore of the utmost importance and will be a challenge for Li’s successor. He or she will have to be an expert on the financial markets and regulatory regimes of Hong Kong and the mainland, and a tough enforcer.

Li helped push through the biggest reforms in Hong Kong’s listing regulations in three decades in 2018, which enabled companies with dual-class shareholdings to raise capital here.

That led to Alibaba Group Holding, owner of the South China Morning Post , to launch a US$12.9 billion secondary listing last November. Other mainland tech darlings such as JD.com and NetEase are expected to follow.