Hong Kong Exchanges & Clearing (0388)

[weijian]

Hong Kong Exchange's new CEO is put on cleanup duty

His predecessor, Charles Li, oversaw a doubling of revenue during his decade in charge through acquisitions, loosened listing rules and, most importantly, trading links with mainland China.
.......
In a review released last year after the former IPO vetting co-head was arrested for bribery, the SFC discovered "numerous ambiguities" in the Chinese Wall between its listing and business divisions.
.......
David Webb, a former HKEX director, investor and corporate governance activist, is skeptical the bourse will institute any meaningful reforms.

https://www.businesstimes.com.sg/stocks/...eanup-duty

[weijian]

During the past 12 months with Hong Kong  citizens  exposed to  covid virus infection attack  , the HKEX  shares have  traded up from $250 levels to around $480 level  with  sky high  PE  at  52. 

During  past  5 years ,  EPS has risen from $4.76 ( 2016) to $9.1 ( 2020 )

It must be too overvalued  for  valuebuddies.

From its lofty valuations of PE~50, HKEX's fortunes has reversed path and it is currently trading at 52weeks low. On hindsight, it's ATH seems to roughly coincide with China Mega Tech's ATH (represented by HSI TECH ETF)

Stock Connect has been the absolute game changer. North bound traffic is still consistently 4x of Southbound and this means that the Motherland is benefiting more than less. The control and grip hold of the CCP will ensure that the Stock Connect is the mutually beneficial and proven way to move capital in a controlled and transparent manner.

With China-US conflict only going to exacerbate in the coming years, there will be a strong tail wind of homecoming companies.

HKEX looks like a simple enough bet, if one wants to bet on China. The only question would be its valuations because "casinos" don't come cheap.

[weijian]

Hong Kong’s share of Asian IPOs slumps to over 2-decade low

Even with an extra US$4 billion in IPO proceeds, Hong Kong’s share of the Asia total – currently US$108 billion – would still be the smallest since 1999. The city has always commanded a double-digit grasp of the Asia IPO market, with an average of 26 per cent from 1995 to 2021, the data show.

In contrast, IPOs on mainland Chinese exchanges have boomed this year, bucking the global slowdown. With firms having raised US$74.5 billion in Shanghai and Shenzhen this year, they account for 69 per cent of Asia’s IPO haul, the highest on record.

https://www.businesstimes.com.sg/garage/...decade-low

[weijian]

Just when we thought the STI was really bad. In the last 6 months, HSI has probably overtook STI as an index that went nowhere in the last decade.

Hong Kong: Battered stocks hit 11-year low

HONG Kong’s flailing stock market tumbled on Monday (Oct 3) to its lowest point in more than a decade as fears for China’s economy deepens this year’s investor rout.

The Hang Seng Index shed 0.83 per cent, or 143.32 points, to close at 17,079.51.

But crucially it crossed below the 17,000 level in the afternoon, touching a nadir not seen since October 2011 and the aftermath of the global financial crash and during the eurozone debt crisis.

https://www.businesstimes.com.sg/stocks/...1-year-low

[weijian]

While equity trading/clearing is still the main driver, but a couple of financial institutions (brokerage/exchange) that I had looked at, is suggesting that derivatives (futures/options) are consistently gaining ground over the years.

Would it be a zero sum game where futures/options trading take market share from equity share trading? Maybe yes, maybe no. But having new instruments to widen the product range to capture a larger customer base, is definitely good for your long term moat in terms of customer mindshare and stickyness.

China’s wild markets send Hong Kong derivatives to third record year

The bourse itself has boosted efforts to grow the market. It launched weekly options on the Hang Seng Tech Index in September and on 10 single stocks – including HSBC Holdings, Tencent Holdings and Alibaba Group Holding – in November. In their first month of trading, the weekly versions accounted for more than 10 per cent of the total contracts volume for most of the companies.

https://www.businesstimes.com.sg/compani...ecord-year

[CY09]

Options trading is a new form of gambling. This is because the leveraged amount inbuilt within options+ the timeline to exercise creates gains/falls which are multiple of times. Chinese people love to gamble and the dopamine that can be induced from trading options can be a lot (i buy/sell options and am chinese so I know what I am saying : p)

I am not surprised that derivatives/options will become a larger and larger portion of market share given the inherent gambling gratification it brings. It is a legal form of gambling where the odds are stacked in the favour of the "house". SGX was fortunately quick to jump on this bandwagon and HK is starting as well. The Chinese brokers of Futu/UP Fintech has capitalised on this as well albeit, they have been regulated by China to protect the china citizens but their revenue from outside of china has seen options brokerage growing

[ghchua]

Hi CY09,

I thought options are mostly used for risk management and hedging purposes (rather than gambling as you have cited). When used correctly, it can actually help investors to derive yield (by selling options on stocks which you have already owned and collecting premium) or minimize lossses. It can also help investors to derive various option strategies to tackle markets that ranges and not going anywhere.

Ultimately, it is just another instrument for investors. For gamblers, they can also gamble on penny stocks if they wish to even if there are no derivatives around for them to play with.

[CY09]

Traders (gamblers) like to bet on prices moving up or down in their favour. Just by buying the shares will not amplify earnings. But buying options amplifies it. I am not advocating trading but do use the Tiger/webull app and you will see retail investors now have access to many of the large cap company be it HK, USA. The options avaliable for just one company spans across different date rexpiring at different timeline and put and call are at different prices. And the best part is that the comission to buy or sell a single option contract is only 1 dollar. The volume of options being bought/sold with expiry in 1-2 months for many of the stocks is many. The most popular option trading thus far I have seen is Tesla.

For Tiger, options trading has gone up by about 60% year on year and tiger caters to retail. Yes options does serve its original intention of helping ppl to hedge, but the option of selling options on stocks too is a form of gambling because if the price spikes, selling puts means you end up losing your portfolio holdings just to earn a recurring "dividend"

Did think of selling puts far into time range and at a high strike price for my alibaba shares, but then decided not to because if there is a spike in price, I lose everything and enjoy little of the upside.