* Bourse to launch A-shares futures
* Preparing to launch southbound bond connect trading
* Will pursue measures to shorten IPO settlement cycle (Adds further context, share price reaction)
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.”
The new plan marks a change from the bourse’s previous strategy which was focused primarily on connecting international investors and mainland China.
Currently the bulk of stocks that can be traded in or through Hong Kong are those of Greater China-focused companies, 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.
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 – a major risk identified by investment banks and other market participants concerned about market-moving news occurring in the intervening period.
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.
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 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.
Shares in the bourse operator were trading as much as 0.6 percent higher on Thursday morning, compared with a 0.1 percent fall in the benchmark Hang Seng Index.
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