HONG KONG :The chief executive of the Hong Kong stock exchange shrugged off worries that regulatory changes in China which roiled markets this year could have a long term effect on initial public offerings (IPO) and trading volumes in the Asian financial hub.
Crackdowns by mainland authorities on industries from technology to real estate have deterred some investors from stocks traded in, or through, Hong Kong.
"In terms of IPOs, the market has been affected by cautious sentiment from investors including concerns around regulatory developments in China," said Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing (HKEX).
"But at the same time we have seen our pipeline (for main board listings) build to its highest ever level," he said, in comments after the exchange's third-quarter results.
"I'm still optimistic about the outlook."
The third quarter is typically strong for Hong Kong capital raisings, but the US$6.8 billion raised over the period to the end of September represents the worst quarter since the pandemic-hit first quarter of 2020, and the worst third quarter since 2017.
The Hang Seng China Enterprise Index which tracks Hong Kong-listed Chinese shares, lost 18per cent in the third quarter, its worst period since 2015, while the benchmark Hang Seng Index this month touched its lowest level in a year.
This market volatility helped HKEX in the short term, as fees from trading and tariffs rose 10per cent in the quarter, but it nonetheless posted a fall of 3per cent in quarterly profit as fees were offset by a fall in investment income.
In the long run, Aguzin said, the demand to invest in China would stay strong.
"The long-term potential of the market, I think, is still very strong," he added.
"We will have to go through some bumps in the road as the country finalises all the different regulatory initiatives."
(Reporting by Alun John; Editing by Sherry Jacob-Phillips and Clarence Fernandez)