HKEX CEO Nicolas Aguzin on new IPOs, China, the Middle East and Aramco

Excess savings from Chinese households could be an opportunity for growth and are likely to deliver “active” economic performance for Hong Kong’s stock exchanges and clearinghouse, its chief executive told CNBC on Thursday.

“I think the second and third quarters should be active quarters in terms of China’s economic performance,” Hong Kong Exchange and Clearing CEO Nicolas Aguzin told CNBC’s Emily Tan.

He said he sees about $2.5 trillion in excess savings accumulated by Chinese households during Covid.

“All that consumption that didn’t have an opportunity … will suddenly come back into the market and create great opportunities for growth,” Aguzin said.

The CEO’s comments follow The exchange operator published full-year profits for 2022 which saw profits fall nearly 20%, with total profit attributable to shareholders of HK$10.08 billion ($1.7 billion)

Meanwhile, the HKEX posted a record fourth quarter, with earnings attributable to shareholders of HK$2.98 billion, an 11% jump compared to 2021.

In the HKEX earnings report, Aguzin said there is a “horizon of opportunity” ahead for this year.

“We will continue to witness the release of mainland China’s domestic savings, exponential growth in the flow of investment to and from the mainland, and an acceleration of international participation in the mainland economy,” he said in a report.

HKEX shares gave up gains of more than 1% after the results were released and closed flat on Thursday.

HKEX recorded only 90 new IPO offerings in 2022. This compares to 182 IPOs in 2019 and 218 new offerings in 2018, HKEX market statistics showed

“Macroeconomic and geopolitical conditions led to weak sentiment and softness in the global IPO market,” the company said in an earnings report.

However, Aguzin said in a statement that there were “signs of encouraging dynamics in the IPO market” in the second half of the year.

Looking ahead to 2023, he told CNBC, “It should be a much more constructive year,” stressing that “we’re experiencing positive momentum in China itself.”

This was reported by the Bloomberg agency earlier on Wednesday that Chinese authorities had asked state-owned enterprises to phase out the use of the “big four” US accounting firms.

Asked if there was an increased risk of delisting companies, Aguzin said: “I don’t know how the delisting will go or if it will happen. I mean, it’s a negotiation that’s ongoing and will have its own direction,” he said. and added that he believed there was value in “greater international interaction”.

“We are the window that connects China and the world. And we are doing our best to ensure greater interaction and greater connectivity.”

He asked about efforts to attract Saudi AramcoAguzin, the state-owned oil giant in Saudi Arabia, said: “What I’m most excited about in the Middle East is the opportunity you have with the top 10 asset managers, sovereign wealth funds from there.”

“They have almost $3.8 trillion under management,” he added.

“We are always open to companies from the Middle East who can come if they want to. That can be channeled in this part of the world,” he said.

CEO told HKEX’s signed memorandum of understanding with the Saudi Tadawul Group is still in the “early stages”.

“We’re also going to have some personnel changes, so a lot of initiatives — and we’re in the early days, so we’ll have to see how that plays out,” he said, without elaborating.

“The key point is to make sure we have that connectivity. They’re two great markets — they have the same goals as us. They want to connect, they want to make sure investors have opportunities, that their companies can grow, can work on that diversification.” he said.