HKEX chief Charles Li to leave next year as headwinds mount

Mr Charles Li, 59, will step down when his contract expires in October next year, or earlier if a replacement is found. PHOTO: REUTERS
Mr Charles Li, 59, will step down when his contract expires in October next year, or earlier if a replacement is found.PHOTO: REUTERS

HONG KONG • Hong Kong Exchanges and Clearing (HKEX) chief executive officer Charles Li said he is stepping down after 10 years, announcing his departure at a time of rising challenges for the bourse and after its failed bid to take over its London counterpart last year.

Mr Li, 59, will continue to lead the exchange until his contract expires in October next year, or leave earlier if a replacement is found, according to a filing.

The bourse operator yesterday posted an unexpected decline in profit in the first quarter as its investment income slumped, offsetting a surge in trading. The exchange is struggling with several headwinds, including a deepening economic slump in Hong Kong and growing political tensions, which all but stalled its profit growth last year.

HKEX chairman Laura Cha praised his leadership and thanked him "for giving us as much time as possible to ensure a smooth transition". She added: "The board is confident that the succession process will be smooth and orderly and that the group is on a strong foundation."

The company's net income fell 13 per cent to HK$2.26 billion (S$413.8 million), missing an estimate of HK$2.77 billion, while core revenue rose 19 per cent. It posted a small loss on its investments, after a big gain a year earlier.

As volatility fades, there could be a "sharp reduction" in revenue and earnings for the exchange, United States investment bank Goldman Sachs said in a report last month. Declining volatility and reduced income from investments will be "double headwinds for revenue" this year.

It is struggling to find new revenue sources after the failed bid to buy the London Stock Exchange last year. China is relaxing rules for listings on its bourses in Shanghai and Shenzhen and is opening up its financial market to full ownership by foreign banks this year, posing a challenge to Hong Kong's role as the main financing hub for Chinese companies.

China's increasingly assertive stance towards Hong Kong is raising doubts about the exchange's push to expand its landmark Stock Connect programme, which allows trading of stocks between the city and Shanghai and Shenzhen. Mr Li said in February that one needs to "be realistic" on expecting progress on big market initiatives because of the Covid-19 pandemic.

One main point of contention is whether to include dual-listed shares with weighted voting rights, like Alibaba Group Holding which listed on the exchange last year.

Born in Beijing, Mr Li grew up in the north-western Gansu province during the Cultural Revolution.

He worked on an oil rig before studying English Literature at Xiamen University. A short stint as a journalist led him to the US, where he earned a law degree at Columbia University.

He spent a few years at law firms, including Davis Polk and Wardell, followed by 16 years in banking. He was at Merrill Lynch and then JP Morgan Chase, where he was China chairman, before he joined HKEX in 2009.

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A version of this article appeared in the print edition of The Straits Times on May 08, 2020, with the headline 'HKEX chief Charles Li to leave next year as headwinds mount'. Print Edition | Subscribe