HKEx is world’s largest exchange operator as SGX languishes

HONG KONG — Shares of Hong Kong Exchange (HKEx) skyrocketed about 60 per cent over the past eight trading days, making it the world’s most valuable bourse operator, worth about HK$290 billion (S$51 billion).

Meanwhile, the Singapore Exchange (SGX) continues to languish, with the local bourse facing plummeting trading volumes and technical glitches that have tarnished its reputation.

A move by the Chinese authorities to give mutual funds increased access to the Hong Kong market via the Shanghai-Hong Kong Stock Connect has boosted share trading volumes in recent weeks. Chinese investors bought the maximum daily allowance of 10.5 billion yuan (S$2.3 billion) last week for the first time since the link started in November.

The flood of money from mainland China investors switching to better-valued stocks in Hong Kong helped HKEx become the world’s largest exchange operator, displacing CME Group of the United States, which has a market capitalisation of about US$31 billion (S$42.1 billion). In comparison, SGX is worth only about S$9 billion.

Yesterday, HKEx shares retreated about 4 per cent to HK$285.60 on profit taking, after the near-20 per cent jump on Monday, as the counter took the top spot on the most-actively traded list yet again.

While HKEx has been basking in the limelight, SGX has seen turnover falling, with total securities trading value last year at S$266 billion, down 25 per cent from 2013. SGX also suffered three major technical faults last year that disrupted trading and undermined confidence. In February, SGX said Chief Executive Magnus Bocker will not be renewing his contract when it expires in June.

But SGX has to do more than putting robust infrastructure systems in place. Mr Roger Tan, chief executive of Voyage Research, said: “There are many things that SGX not only needs to do but also undo. I believe SGX should start reversing some of the policies that were brought in in the last few years, including the Minimum Trading Price policies and the need to give out trade with caution alerts.”

“SGX should also stop playing the two-faced role — that of market promoter and regulator. A securities commission should be set up so that SGX can focus on just promoting. This will make it more market-oriented,” he added. TAN WEIZHEN