* Bourse to launch A-shares futures
* Preparing to launch southbound bond connect trading
* Will pursue measures to shorten IPO settlement cycle (Adds additional details on HKEX’s strategy, context)
By Alun John
HONG KONG, Feb 28 (Reuters) – Hong Kong’s stock exchange operator on Thursday said it would look to attract more companies from the Asia-Pacific region to list in Hong Kong and expand its stock and bond connect schemes linking mainland China with global markets.
Hong Kong Exchanges and Clearing Ltd (HKEX), in a statement outlining its three-year strategy, said its aim was to “increase our international relevance to China and Asia, and our Asia relevance to the global markets.”
Currently the bulk of stocks that can be traded in or through Hong Kong are those of companies focused on Greater China, but the bourse said it would change its listing regime to better attract Asia-Pacific companies, and work to become an exchange-traded fund (ETF) issuance and trading hub in Asia.
HKEX, which competes with mainland Chinese as well as international exchanges, has also been looking to diversify revenue away from that linked to equities trading.
In its statement, it said it would launch A-shares futures products to support hedging of Chinese shares by international investors, and would enhance its stock and bond connect schemes to give mainland investors access to Hong Kong-listed ETFs, initial public offerings (IPOs) and bonds.
The stock connect, launched in 2014, and bond connect, launched in 2017, give international investors access to mainland Chinese markets via the Hong Kong exchange, and Chinese investors access to Hong Kong’s capital markets.
HKEX said it would prepare to launch southbound trading via its bond connect to let mainland-based investors trade Hong Kong bonds.
“The connects … have been operating successfully for a number of years, now we need to enhance them,” said Chief Executive Charles Li in a video on the exchange website.
In Hong Kong, it will look to shorten the IPO settlement cycle, the five-day period between the end of an IPO and the company’s start of trade – an irritation oft-cited by investment banks and other market participants.
To further meet the interests of market participants, HKEX last week announced the formation of an international advisory council including Stuart Gulliver, former group chief executive of HSBC Holdings PLC , Joe Tsai, executive vice chairman of Alibaba Group Holding Ltd, and Mary Schapiro, former chair of the U.S. Securities and Exchange Commission.
On Thursday, it also said it would look to deepen its global operations beyond the London Metal Exchange, which it acquired in 2012.
The bourse on Wednesday reported a 26 percent surge in 2018 profit to a record high of HK$9.31 billion ($1.19 billion), boosted by fees from mega IPOs in the first part of the year as well as clearing fees and strong trading. ($1 = 7.8493 Hong Kong dollars)
Reporting by Alun John; Additional reporting by Donny Kwok;
Editing by Stephen Coates and Christopher Cushing