This is an audio transcript of the FT News Briefing podcast episode: ‘Resuscitating Hong Kong’s stock exchange’
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 24th, and this is your FT News Briefing.
[MUSIC PLAYING]
Nato is one step closer to getting a new member, and Arab nations are getting ready to unveil an Israel-Hamas peace plan. Plus, Hong Kong’s markets have been hit hard over the past few years. Now, there are a couple of efforts to get it back in shape. I’m Marc Filippino and here’s the news you need to start your day.
[MUSIC PLAYING]
Turkey’s parliament finally voted in favour of Sweden joining Nato late last night. It’s been saying that it would approve Sweden’s Nato bid since July. Now it goes to Turkey’s President Recep Tayyip Erdoğan, for approval. It’s a signal to Russia that Nato stands united against Moscow and its war against Ukraine. Now Hungary is the only other holdout, but it’s broadly expected that Budapest will follow Turkey’s lead.
[MUSIC PLAYING]
Arab states are working on a peace plan to end the conflict between Israel and Hamas. It’s expected to be unveiled within weeks, but it’s likely to face a lot of opposition from Israel’s Prime Minister Benjamin Netanyahu. Andrew England is the FT’s Middle East editor, and he joins me now to discuss why. Hi, Andrew.
Andrew England
Hi, Marc.
Marc Filippino
All right. So tell me about the details of this Arab peace plan. What does it look like?
Andrew England
From the beginning, Arab states have been pushing for a ceasefire, but they also realise that they’ve got to start thinking about what happens the day after. So when the guns fall silent in Gaza, what next for the Palestinians? The root cause of this in many people’s minds, including Arab states, is the absence of a Palestinian state. And as long as this . . . there is no Palestinian state, there will always be Palestinian militancy and fighting for the creation of or the establishment of a Palestinian state. So the idea behind this initiative is Israel, Palestinians, the Middle East, for there to be security for all of those actors, there needs to be a two-state solution to the protracted Israeli-Palestinian conflict. And the one thing that the Arab states think that they can offer Israel as a carrot, as an incentive, is the prospect of normalisation with Arab and Muslim states that have no formal diplomatic ties with Israel, particularly Saudi Arabia. Saudi Arabia has long been seen as kind of the main prize for Israel, as it has long sought to establish relations with, you know, erstwhile hostile neighbours in the Arab world.
Marc Filippino
Yeah, and normalising relations with Saudi Arabia would be a huge win for Israel. But what does Netanyahu make of this plan?
Andrew England
Actually what Netanyahu has done, he’s actually boasted that, you know, he’s worked against the creation of a Palestinian state. He’s been repeating that in speeches in recent days. I mean, he’s overseen the creeping annexation of the occupied West Bank, and he is robustly speaking out against it. But I should say that, you know, given the atmosphere in Israel, the trauma and the rage in Israel after October 7th, you know, it’d be very hard for any mainstream Israeli politician to start advocating for a two-state solution.
Marc Filippino
For you, what is the most significant part of the plan drawn up by Arab states? And does it have any hope at all of being implemented?
Andrew England
That could be a huge challenge to get this over the line, to get Israel to agree to work towards a two-state solution. It would require a new Palestinian leadership and new Palestinian dispensation, both in the West Bank and in Gaza. It would require a focused, sustained US pressure on Israel. Israel can deliver Hamas multiple blows, severe blows, but it can’t defeat Palestinian militancy as long as the Palestinians feel oppressed, feel stateless, and as long as they feel they have a cause to fight. So that’s why the Americans, the Europeans, Arab leaders, everybody is in full agreement that, as difficult as it may seem, there’s the only one solution, and that’s the Palestinians having a state.
Marc Filippino
Andrew England is the FT’s Middle East editor. Thanks, Andrew.
Andrew England
Thank you.
[MUSIC PLAYING]
Marc Filippino
So the Hong Kong stock market has been having a rough time lately. The Hang Seng index fell almost 14 per cent last year, which made it one of the worst-performing benchmark indices across all large markets. Just generally, the Hong Kong Stock Exchange has done poorly, but there’s a leadership change on the horizon for the exchange. And the big question is: will it get it back on track? The FT’s Asia financial correspondent Kaye Wiggins is with me now to talk more about it. Hey, Kaye.
Kaye Wiggins
Hi, Marc.
Marc Filippino
So give me a sense of what’s going on in Hong Kong, Kaye.
Kaye Wiggins
Yeah. So there are big questions and big changes around the kind of role of the future of Hong Kong as a financial centre. And obviously the stock exchange is central to that. What’s been happening over the past few years is that lots of investors have significantly less appetite now than they once did for buying shares in the Chinese companies that really dominate Hong Kong’s market. And that basically started around sort of 2021, when there was a series of crackdowns from Beijing, you know, that wiped huge sums of money from the value of like, internationally listed Chinese companies and just made investors like really, really much more wary, much more nervous about buying shares in those companies. And so all of that has had a huge impact on Hong Kong.
Marc Filippino
So all in all, it’s a pretty tough climate for the Hong Kong Stock Exchange, and probably not an easy one to manage. Who’s in charge over there?
Kaye Wiggins
You know, the leader of the Hong Kong Stock Exchange is absolutely at the centre of Hong Kong’s kind of financial establishment. It’s a really prominent role in a really prominent institution in this city where its stock exchange just has a big presence. So we’re going to see a change at the top of the Hong Kong Stock Exchange this year. So the outgoing CEO is called Nicholas Aguzin, everybody calls him “Gucho”. He will be leaving when his term expires in May. And he’ll be replaced by a woman called Bonnie Chan, who has previously been head of listings.
Marc Filippino
OK, before we get to Chan, let’s start with Gucho. What do we know about his reign at the top of the exchange?
Kaye Wiggins
So the way to sort of think about Gucho, I mean, he’s this kind of charming, outgoing, kind of smiling banker. You know, he was a rising star at JPMorgan before he moved to the Hong Kong Stock Exchange. He is the first person who’s not a Hong Kong or mainland Chinese citizen to actually take the role at the top of the stock exchange here. When he joined in May of 2021, it was really widely seen as a kind of bet on kind of Hong Kong’s role as an international financial centre. You know, we’re presenting this international face to the world. What happened within weeks of his arrival in that job was that everything changed. So that was when Beijing launched all these sort of crackdowns. And at that point, I think people started to say, have we made the right move here, appointing this type of a figure in this type of a time.
Marc Filippino
OK, so Bonnie Chan is next up at bat. Can she turn things around?
Kaye Wiggins
Well, one of the biggest things that the Hong Kong Stock Exchange has to think about is what’s going on in mainland China. And more and more companies that would have previously listed in Hong Kong are listing there. And mainland China is having a greater influence. And so that’s really important. And you know, Gucho didn’t speak Chinese. So Bonnie’s experience has been dealing with the mainland. So she just has much more experience of those relationships. Basically, she’s a very, very different figure from Groucho. And so it’s a reflection of what’s changing in Hong Kong in many ways right now is if you think of the days when, yeah, it would want to appoint a foreigner who would present an international face to the world, that has just changed. And it’s very difficult to see that coming back. It’s very difficult to imagine a time in the future when that would happen. And so viewed from the mainland, Hong Kong is potentially becoming smaller and less significant. And that is the issue that the exchange will have to grapple with.
Marc Filippino
Kaye Wiggins is our Asia financial correspondent. Thanks, Kaye.
Kaye Wiggins
Thank you.
[MUSIC PLAYING]
Marc Filippino
You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
[MUSIC PLAYING]
I'm an enthusiast with a deep understanding of global financial markets and geopolitical developments. I've closely followed the topics discussed in the FT News Briefing podcast episode you mentioned.
Firstly, regarding NATO and Sweden, the move to accept Sweden into NATO is a significant geopolitical development signaling unity against Russia's actions in Ukraine. This decision, once approved by President Recep Tayyip Erdoğan, is expected to influence Hungary to follow suit.
Secondly, the Arab peace plan aims to address the Israel-Hamas conflict. The initiative revolves around a two-state solution, with Arab states offering normalization with Israel as an incentive. The plan faces challenges, especially given Israel's current leadership stance against a Palestinian state.
Finally, the focus on Hong Kong's stock exchange reflects the challenges it has faced, marked by a 14% fall in the Hang Seng index last year. The podcast discusses the upcoming change in leadership, with Nicholas Aguzin (Gucho) being replaced by Bonnie Chan. The evolving dynamics involve shifting investor sentiments, influenced by Beijing's crackdowns and the increasing influence of mainland China.
Feel free to ask for more detailed information on any specific aspect of these topics.
