Bulls, Bears, Falcons & Tigers: Capital Markets in 2023

[Music] oh thank you Sarah very much uh for this introduction and as you just mentioned Sarah now that 2023 we have seen so many ups and downs Bulls were there uh bears were there tigers Falcons everybody was participating in this market and it's interesting uh to see um what are Regulators doing exchanges ndc's providers and all that stuff I think we're shorter in time so I'm going to cut the introduction and start directly to the point and Matas uh and Anita I would like you to give me an overview of what has been happening uh whether from an exchange perspective or an IND this index provider uh over the past few years how things have been developing and let me start with you Matas from a local perspective well thank you thank you very much uh Hussein so yeah it has been a very interesting and dynamic year um what we see here locally is as tremendous demand for the Middle East for IPOs for Investments um we have seen a clear shift so just looked at the leag tables this morning for IPOs and I think it tells a very strong story 40 % of all the IPOs this year we're actually in China where Anita will talk about um 30% were in the US and Canada and now to probably surprise of most people here 11% were in the Middle East and out of these 11% a total of 7% was here in Abu Dhabi so and what we see on the back of this and driving this is really the vision of connecting Abu Dhabi to the international financial markets it's about driving liquidity connecting investors and obviously have a regulatory framework as well as a technology backbone that makes it easy to access abudabi and Ultima also telling the story of the opportunity that is here and is very real indeed interesting and yeah um I know that you actually want to talk about the latest development but I want to take the opposite approach I want to talk about history okay yeah as you know that we are the index compiler from Hong Kong and actually back to 55 years ago we focus on the Hong Kong stock market and we launched the hangang index and then I think as time goes by as the market evolve and actually back to 30 years ago in 1994 we launched the first China index at that time that is called hangang China Enterprises index and at that time because China companies started to to come to Hong Kong for listing and in the old days the Hang China Enterprises index just included egg shares but actually in terms of the index offering we keep on evolving with the markets so the market start to have various kinds of Chinese companies they have the red cheese pivate Enterprises so the Hang China Enterprises index keep on evolving to include actually every kind of Chinese companies coming to Hong Kong so that's is what happened 30 years ago and then I think back to 15 years ago what happened is that I think back to 15 years ago about 2007 we already anticipate the Global Investors and the institutional investors is actually going to increase the allocations to China so that's why in 15 years ago the Hang indues company also started to launch index covering Asia as well because the market is also starting to open up okay so at that time we mainly focus on the Shanghai and Suson Stock Exchange and back to your question the latest development so this is something really happened early this month early this month is we already got obtained the data license from the Beijing Stock Exchange so all of you know that Beijing Stock Exchange is the the third Exchange in the in the China and nowadays hsen indexes is the only one offshore index compiler that can provide the comprehensive coverage for the China exchange data because we understand that the institutional investors from the overseas perspective is a little bit complicated to understand China because we have so many exchanges we have different class of shares but we hope that what we are trying to do can help and I think the magic okay in terms of why the power of having such comprehensive um coverage can eventually be Amplified because of exactly the role of Hong Kong as the super connector so probably you know that 10 years ago Hong Kong start to have the stock connect program which overseas investors can getting more easier to access the Asia Market and on the other hand the mnan investors also get easier to come out and then to invest in the Hong Kong shares and the latest development again is something happened in July last year they have the ETF connect or you can see that they actually put the ETF under the stock connect so that means the international investors can easier to get access to more Asia ETF listing on Shore and on the other hand mnan investors can also be more easy to get access to the Hong Kong listed ETF indeed it's actually echoing your keyword connect so actually this is helping the two markets to connect and also to help the overall Market trading and liquidity interesting I think I've I've been covering this in my news show at CNBC with the latest development Anita and another thing I was covering also on CNBC is the growth of the IPOs that we have seen in Abu Dhabi over the past uh two years but the big question was for I think this is not my question but for so many investors can we sustain this amount of IPOs that have been uh coming to to uh adx I think it's a great question and maybe I I take a quick step back and reflect on the IPOs so first and foremost to put things into perspective the IPOs we had over the last two years were on average 50 times over subscribed uh they were trading 30% up on the first day of trading and continue to trade on that level and we see huge demand from International investors to part participate and the reason why there's the performance is so good is because the underlying assets that the government the leadership um and part of the Sovereign we front brings here is is the quality of the asset on a on a wide range so to answer your question I think we are uh very positive and bullish about the years to come we have a strong Pipeline and in order to keep the momentum going it is to come back to Anita's point a key point is and will be to connect adx Abu Dhabi Capital Market to the world to other St to uh in Global Investors in order to keep that strong demand we know that on the supply side there is a continuous strong pipeline coming in Abu Dhabi just on this point does it mean that we're going to see more of dual listings uh yes we will see uh dual listings for sure um you might have seen very recently that we entered an agreement a month ago one and a half month ago with bony melon bony melon is the largest custodian in the world this gives us the ability to pretty much anywhere in the world have a dual listing um we see very strong demand particularly from from the East to do a list and tap the capital market and uh since we have now the technology in place we will push for this awesome uh Anita back to you and this time on fintech I think things have been moving so fast uh over the past two weeks we were very busy covering open Ai and CH GPT and what have been happening at the firm over there but now we want to know how are you implementing and innovating your core engineer at the Hang indices I think in short I would say technology nowadays is king So I think in the past few years even that's the pandemic time we never stopped investing in our it and also never stop investing in our infrastructure first thing is that actually this year we am we started to have the cloud first strategy that means we move our index system as well to the cloud native environment and the other thing is in terms of the database we actually also um trying to use the cloud technology to consolidate the scattered database into one one database to enhance the overall um the c lower the cost enhance the efficiency and everything and other than the cloud we actually also using the AI especially we use the NLP that is the natural language processing algorithm technology so this technology is very powerful and also helpful to the index company especially when we need to do the fmatic index so probably share with you something is is that in terms of the M ETF Market they have more than 800 ETFs already and the key Trend that what they are doing in terms of the product development is to have the fmatic index so once we have the NLP this kind of AI technology we can actually quicker to identify the theme so that to help the the market to provide the better fmatic solutions to help their product development and the other area is that we also work closely with the ftech say for example for the smart beta indexes we need a lot of the Quan model to have this kind of the back testing technology so I think we also work very closely with the ftech nowadays I think Finance Company need to have a lot of the technology elements otherwise I think the business model may not be sustainable awesome um Matas so an just touched on ETFs and I think Abu Dhabi uh exchange have also been Keen in launching ETFs I would like to know how are these ETFs helping or bringing in uh more maybe foreign direct Investments or liquidity into the market along with other products that you may be using as well nowadays in order to allow investors probably to hedge their portfolios or to do something that were not possible before yes no thank you so ETF is an important part of of our strategy to broaden and deepen the market uh ETF goes together with a lot of other initiatives be derivatives uh stock Ling borrowing go trading and and other initiatives now the ETF has been a great success uh 44% of all ETFs in the GCC are listed on adx we're also the most liquid what we have seen as well is because we are not as an advanced Market as as Hong Kong that key around ETF is education it is part of our role as an exchange to educate the market participants how does an ETF work how to best use it but also to tell the story importantly to the retail investors and we see um further products being pushed next year but always always together with strong educational aspect around what these products mean and how to use them fantastic and Anita when we come to regulatory issues China have been opening the market for so many years now and every year we we learn about the new regulation ations what's next now I think the Hong Kong market and the China Market is very dynamic they keep on evolving actually I think accoring what you're asking I think three perspective I would like to share the first one is about the listing regimes so indeed the Hong Kong exchange keep on evolving their listing regimes I think they welcome nowadays for foreign companies secondary listed companies waiter voting rights pre-revenue biotch so on and so forth so you can see they keep on evolving to attract more IPO coming to Hong Kong so this is the listing regimes and the other one is about the ramen B internationalization actually last week the Hong Kong regulator sfc announced that the um the China treasury bond Futures Contract is coming to Hong Kong and Hong Kong ex is working on that for now so this is one way to help the REM andb internationalization and the other one is mid this year Hong Kong y also launched the the kind of the Hong Kong dollar Ren B deal counter which means once stop lisening in Hong Kong can have two counter one is Hong Kong dollar and one is Ram B counter so this is still in the very early stage the r count liquidity is yet to build yet to be built but I think that in if the direction is correct then I think it takes time to build the liquidity and when the market is ready we can also launch these kind of indexes to support the the ranb internationalization and the last one I want to say is that in Hong Kong in terms of all the development connectivity is something very important so I think nowadays in Hong Kong we have the stock connect we have the ETF connect B connect swap connect actually various kind of connect so for this kind of connect program we actually um what we want to help is to increase the accessibility of different market and the index compiler we try to play a role here to facilitate all the connects can can be very efficient and also to help the expand the investor base I think this is something the listed company wants the most awesome um you know I had so many other questions to bring but as I can see here our time is over so maybe I'll take it to my CNBC next to have continue this conversation but thank you very much an thank