Hong Kong stock exchange’s operators are actively focusing on investing in companies specialized in innovative technologies especially on blockchain domain. The company closely work with the Hong Kong stock exchange is focusing to invest in innovative technology as reported by the people familiar with the source, Bloomberg.
The Hong Kong Exchanges & Clearing (HKEX) has its growth plans shifting on Hong Kong’s close relationships with China, however, the company is now transforming and incorporating the technologies like blockchain.
Amid this, the Bloomberg’s sources said in its statement that HKEX CEO Charles Li is actively focusing about acquisitions in the data, analytics and blockchain sectors. The company has held various meetings with almost three investment banks in order to negotiate potential startups and established firms. However, none of the companies’ name has been declared by the sources so far.
With the growth of trading relationships with Chinese exchanges is sluggish at present, Li wants to incorporate the model of the venture capital arms of US giants like Nasdaq and CME Group. Further elaborating the subject matter, the sources said that HKEX executives were also worried about the disgruntle relationships between China and the US that might have a negative impact on a variety of activity like trading volume and ultimately on the company’s revenue growth.
As part of internal strategy discussions, the HKEX senior managerial team held discussion upon technology acquisitions as on 10th September. The mainstream issue at the discussion was also in the spotlight during a meeting with board members on September 12. With this, HKEX’s management is expected to meet in order to create the basics of a three-year strategic plan that may start next year. The final plan will officially be announced in early 2019.
However, in 2017, HKEX generated a major part of its revenue from clearing activities and trading fees. So it would be prudent to incorporate the innovation and technology that may diversify the sources of revenue as profusely said by Li during the meeting with senior managers.
Amid this, Banny Lam, head of research at CEB International Investment commented to Bloomberg saying that “The strategy is in the right direction but it is not easy to achieve the targets. HKEX needs to maintain a momentum of growth by exploring new businesses.”
Besides this, the official sources said that the stock exchange operator might find it difficult to entice investors that it can successfully transform to technology. Because they failed to successfully integrate London Metal Exchange which HKEX bought in 2012 for $2.2 billion.
According to the Financial Times, it reported in March this year that HKEX was expected to collaborate with the Australian Securities Exchange (ASX) to execute blockchain application. With this, ASX is at stake regarding the technology to fully replace its Clearing House Electronic Subregister System (CHESS).