HKEX



Hong Kong Exchanges and Clearing Limited is the stock exchange of Hong Kong. HKEx is the holding company for The Stock Exchange of Hong Kong Limited (SEHK), Hong Kong Futures Exchange Limited (HKFE) and Hong Kong Securities Clearing Company Limited. With a total market capitalization of over US$2.124 trillion as of as at July 12, 2007, the HKEx ranks fifth in the world by market capitalization of listed companies (see List of stock exchanges for complete rankings).

History

The history of the securities exchange began formally in the late 19th century with the first establishment in 1891, though informal securities exchanges have been known to take place since 1861. The exchange has predominantly been the main exchange for Hong Kong despite co-existing with other exchanges at different point in time. After a series of mergers and acquisitions, HKSE remains to be the core. From 1947 to 1969 the exchange monopolized the market.
HKEx was formed in March 6, 2000 by a merger of its three main constituent companies. The company itself is listed on its own exchange, the HKSE.
The Hong Kong Government is the single largest shareholder in HKEx, and has the right to appoint six of the thirteen directors to the Board.
Valuation
As at September 2005, the stock exchange had a market capitalization of HK$ 7,544 million (US$ 967mn), making it the second-largest stock exchange in the Asia Pacific region after Japan.
As at 2006, with a total market capitalization of more than HK$10 trillion (US$1.3 trillion), the Hong Kong Stock Exchange ranks 8th in the world by market capitalization of listed companies. As at July 12 2007, the Hong Kong Stock Exchange ranks fifth in the world, with a total market capitalization of over US$2.124 trillion

Merger speculation

After the New York Stock Exchange announced in November 2006 that it would open an office in Beijing to work with the Shanghai Stock Exchange, Hong Kong Exchanges and Clearing chairman Ronald Arculli dampened speculation saying it has no immediate plans to acquire or merge with other exchanges, but would focus on "strengthening our competitiveness and reviewing our listing fees."
Government share purchase
In September 2007, the government revealed that it had increased its stake from 4.41 percent to 5.88 percent. According to market sources, the Government spent HK$2.44 billion to buy 15.72 million shares in the company. The stake would be held by the Exchange Fund as a "strategic asset".
The move has drawn widespread criticism in Hong Kong and abroad: governance advocate and Board member David Webb said that the government was the second-largest single investor in the Hong Kong market after Beijing, with a portfolio of local equities estimated to be worth about HK$150 billion. He said the purchase violated the government's stated principle of "big market, small government", adding that it increased uncertainty and sends a very negative signal to the market as a whole; the Civic Party criticised the Government for damaging public confidence in the capital market, and interfering with the stock exchange's independence; A Wall Street Journal editorial said that the Hong Kong Government is further interfering in the market to "cozy up to China's tightly controlled domestic exchanges". Financial commentator Jake van der Kamp noted the Financial Secretary's conundrum: The government is faced with a conflict of interest, as its desire for an efficient marketplace is contrary to its desire as a shareholder, who would prefer to maximise returns.
The Government said that it wanted to play a positive role in the stock exchange's development as a shareholder. Analysts expect the Government will continue to increase its stake, as HKEx is being prepared "for future integration and alliance with mainland exchanges". Another analyst was concerned about the independence of "Independent Chairman" Ronald Arculli, who also sits on the Executive Council.

Official Website : www.hkex.com.hk

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