October 15, 2009

The Hong Kong Exchange: A Small Player in China’s Great Economic Reform

Lawrence Fok ’76, executive vice president of the Hong Kong Exchanges and Clearing Limited, detailed the impact of the exchange on China’s economic growth at the Chazen Institute’s Sir Gordon Wu Distinguished Speaker Forum.

More than 75 students, alumni, faculty members and practitioners gathered at the Columbia Club in midtown Manhattan on October 13 for remarks by Lawrence Fok ’76, the executive vice president and head of the Issuer Marketing Division of the Hong Kong Exchanges and Clearing Limited (HKEx). The Chazen Institute of International Business hosted the event as part of its Sir Gordon Wu Distinguished Speaker Forum.

James Walsh ’10, a Chazen Society Fellow, participated in the forum and offers takeaways below.

Fok is responsible for promoting the role of the exchange to potential issuers. After outlining the history of securities exchanges in China and Hong Kong over the past 40 years, he detailed the impact of the Hong Kong exchange on China’s impressive economic growth since the early 1990s. The crux of his argument revolved around the exchange’s strategic positioning as a bridge between mainland China and the rest of the world, providing Chinese enterprises with a liquid market of foreign capital.

As China’s economy grew rapidly in the early 1990s, manufacturing and industrial companies were forced to turn to the outside world for the funds that would allow them to continue to expand their operations; Fok pointed out that Chinese foreign currency reserves were only $30 billion at the time. The exchange was a natural partner due to its familiarity with Chinese businesses and Western financial markets, and it has had a regulatory system acceptable to local and international funds.

In addition to a ready supply of capital, companies that were listed on the exchange benefited from a transfer of professional knowledge and best practices that allowed these Chinese companies to transform from state-owned bureaucracies to competitive commercial entities.

Look for video interviews with Fok and a detailed event report in a forthcoming issue of the Chazen Web Journal of International Businesss.

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