Monday, November 19, 2018
Martin Hennecke

HKEx ID program on the way
Hong Kong Exchanges and Clearing (0388) chief executive Charles Li Xiaojia says the measure of share trading with valid identity will be revealed soon and he will try his best to attract Saudi Aramco to list in Hong Kong, which is expected to be the world's largest initial public offering.

Li said the identification program at the moment only targets local investors buying shares traded in the mainland through the Hong Kong-Shanghai Stock Connect and Hong Kong-Shenzhen Stock Connect.

Meanwhile, he hopes Saudi Aramco, which will soon announce the listing destination, will choose Hong Kong as the first debut place overseas. Even if the SAR is not the first choice for Saudi Aramco, Li believed the oil giant will finally go public in Hong Kong.

Mainland investors will not have to pay individual income tax when trading Hong Kong shares via the Hong Kong- Shanghai Stock Connect from November 17 this year to December 4, 2019.

HKEx began trading futures yesterday, pitting the new dollar-denominated contract against those offered by the Singapore Exchange, which introduced its first swap contracts in 2009 and has become the world's largest clearer of the derivatives.

HKEx has promised newcomers all trading fees for the new product will be waived for six months.

Iron ore sits at the heart of the global economy, especially in the largest user, China, and the commodity has attracted growing investor interest in recent years. The derivatives are used by miners and mills for hedging, as well as by traders and funds.

Goldman Sachs Group found in an 2016 study that it was SGX's product that probably swayed the global market, rather than the more restricted offering on the mainland's Dalian Commodity Exchange. Given the lead, the HKEx may find it a hard task to break out of its beachhead.

"They're going up against a more established offshore contract in Singapore," said Hui Heng Tan, an analyst at Marex Spectron. "It's too early to gauge whether the new contract will gain much traction. Some of that will depend on the terms they're able to offer, such as trading fees and margins, as well as the liquidity of the contracts."

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