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Operating Hong Kong’s inventory trade was by no means going to be a simple job for Nicolas Aguzin, however some who labored with the previous star JPMorgan banker say the duty was not helped by a few of his extra unconventional concepts.
Months after becoming a member of Hong Kong Exchanges and Clearing as chief govt in Could 2021, Aguzin proposed that it ought to award “tokens” to listed corporations primarily based on how numerous their boards have been.
Modelled partly on crypto and partly on carbon credit, “Undertaking Diamond” would compel corporations with all-male boards to both appoint ladies or purchase tokens from people who had.
A number of individuals who heard the pitch recoiled, saying privately it introduced a brand new that means to the phrase “token ladies”. Requested by the Monetary Instances concerning the scheme, HKEX, which announced last week that Aguzin would step down in Could, stated it “was not prioritised for improvement”.
Greater than two years on from Aguzin’s appointment, Hong Kong is struggling to take care of its standing as an essential monetary hub amid the Chinese language economic system’s disappointing post-pandemic restoration and rising tensions between Beijing and Washington.
Aguzin’s critics say the range token thought, and his choice in 2021 to ask the now-disgraced FTX founder Sam Bankman-Fried to handle the trade’s leaders, have been small, early episodes that signalled he won’t be the suitable man to guide the trade via certainly one of its most tough intervals.
Appointing Aguzin to the job on the coronary heart of Hong Kong’s monetary institution was a daring wager {that a} consummate salesman who had risen rapidly via the ranks of the US funding financial institution may help it attract listings and capital from around the globe.
Simply weeks after the arrival of Aguzin — an Argentine nicknamed “Gucho” who doesn’t converse Chinese language and was the primary non-Hong Kong or mainland citizen to take the function — Beijing tightened management over China’s expertise and personal training sectors. The crackdown wiped greater than a trillion {dollars} from the worth of internationally listed corporations and decreased urge for food for the mainland shares that dominate Hong Kong’s market.
HKEX’s share worth has dropped 40 per cent since Aguzin joined and it has fallen from being the world’s most beneficial publicly listed trade to at least one that trails rivals CME and Intercontinental Change. In the meantime, the full market capitalisation of all corporations listed on India’s inventory trade is poised to surpass that of these on Hong Kong’s.
Aguzin’s supporters say he has initiated essential reforms and raised HKEX’s profile worldwide, regardless of going through difficulties far past his management. Worldwide buyers are “working so far as they’ll from China [and] it’s inevitable that the Hong Kong capital markets have been going to be badly affected by that”, an adviser to HKEX stated.
“I don’t suppose anyone else in that job would’ve carried out any higher.”
Hong Kong preliminary public choices by Chinese language corporations — which helped propel HKEX to its best-ever quarterly revenue the month earlier than Aguzin joined — have plunged since July 2021, when Beijing regulators halted offshore listings by start-ups that maintain massive quantities of consumer knowledge.
Hong Kong IPOs have raised simply $5.3bn this 12 months, based on knowledge from Dealogic, placing the market on observe for its smallest annual haul in 22 years.
The Hong Kong authorities, HKEX’s greatest shareholder, stated in August it was establishing a “task force” to make market liquidity “enchancment proposals” to town’s chief govt, John Lee.
Aguzin’s place had already weakened by then. John Buckley, who Aguzin introduced from JPMorgan to supervise what he known as “transformation” on the trade, departed in November 2022 after lower than a 12 months. He was certainly one of a number of senior figures employed beneath Aguzin to go away after a short while.
Buckley, backed by Aguzin, had sought to enhance HKEX’s ageing IT infrastructure and inner processes, an unglamorous process however one deemed obligatory to assist compete with rivals worldwide.
However some insiders resented the involvement of McKinsey consultants, employed to assist with the method, and others thought Buckley was transferring too quick.
“The organisation had no capability to alter at that velocity, and the urge for food from the board was roughly zero,” an adviser to HKEX stated. After Buckley left, “inner communication was rather a lot much less about transformation . . . that complete initiative received parked rapidly”, stated a former worker.
In January, Bonnie Chan, now named as Aguzin’s successor, changed Buckley as co-chief working officer. The heads of a number of main enterprise items report back to the co-COOs somewhat than on to the chief govt.
Aguzin had spent a lot of his time being “an envoy for the agency” somewhat than a hands-on supervisor, a former worker stated. He had been “travelling the world and highlighting that Hong Kong is open for enterprise . . . he’s tremendous enthusiastic for the mission”.
“I’m very happy with the strategic initiatives and achievements that HKEX has delivered since I joined,” Aguzin stated in a press release.
He stated the trade had “continued to ship” regardless of “important headwinds” and had “carried out essential infrastructure adjustments that can place HKEX for continued success for many years to come back”.
HKEX, which additionally owns the London Steel Change, stated it had made “important strategic progress” within the final two and half years, together with on programmes to increase connections between mainland China and worldwide markets.
“International markets have been weak, however the group has reported a few of its greatest outcomes ever, pushed by the corporate’s strategic diversification and its robust monetary administration,” it stated.
HKEX factors to new workplaces in New York and London, in addition to dual-listings agreements with bourses in Saudi Arabia and Indonesia as proof of a rising worldwide profile. However non-Chinese language listings account for simply 6.6 per cent of funds raised on Hong Kong’s inventory trade for the reason that begin of 2022, little modified from earlier years, based on knowledge from Dealogic.
Chan, a lawyer with a grasp’s diploma from Harvard, has a decrease worldwide profile than Aguzin. As co-COO, her obligations embrace technique and “mainland improvement”. She is “smart and intellectually rigorous . . . not essentially a really dominant chief”, an individual who has labored along with her stated.
Chan will take the helm at HKEX at a time when Hong Kong’s standing as a finance centre is precarious. “From our business’s perspective and from Hong Kong’s function as a global monetary centre, we’ve got our work reduce out for us,” stated Robert Lee, a Hong Kong lawmaker representing the monetary companies sector. He stated Chan was “useful, good at speaking, and . . . receptive and open to listening to concepts.”
One govt departing the trade lately warned colleagues that HKEX was vulnerable to dropping significance to mainland China. Ongoing reforms to mainland financial market infrastructure “may additional tilt the steadiness of affect” away from the territory, the manager stated in a doc shared with colleagues shortly earlier than they left.
“Any dialogue of HKEX technique ought to understand that, when seen from a mainland vantage level, [Hong Kong] might seem smaller and smaller yearly no matter how large we would really feel,” they stated.
Further reporting by Joshua Oliver in London and Chan Ho-him in Hong Kong
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