HKEX CEO Charles Li Xiaojia to step down in 2021

Hong Kong Exchanges and Clearing Ltd (HKEX) said on Thursday its chief executive Charles Li Xiaojia would step down from his role as CEO in October 2021, at the end of his current term, or earlier if a successor is appointed before then.

Li gained a scholarship to Columbia University, setting him off on a Wall Street career that led to a transfer to Hong Kong with Merrill Lynch and a decade-long climb to become regional head, before becoming JPMorgan China's chairman in Beijing.

After 16 years in investment banking, Li was named head of HKEX in 2010, with Hong Kong and the global financial system still rocking from the 2008 crisis.

Li's decision to step down raises questions around succession planning and HKEX's strategic direction after his 10-year reign, Citi analyst Tian Yafei wrote in a research note.

"I would like to extend my sincere gratitude to Charles for his extraordinary leadership and contribution to the Hong Kong market over the last decade, and to thank him on behalf of the Board, for giving us as much time as possible to ensure a smooth transition," said HKEX chairman Laura Cha in a statement.

Cha will lead the selection committee to appoint Li's replacement.

Former oil-rigger, journalist and investment banker Charles Li. /VCG

Former oil-rigger, journalist and investment banker Charles Li. /VCG

Li, known for his complex extended metaphors, stunned investors last year when HKEX launched an audacious but ultimately unsuccessful bid to purchase the London Stock Exchange Group.

During his time as CEO, HKEX has presented itself as a gateway between China and the rest of the world, and it has benefited from a wave of IPOs as giant Chinese companies raised billions from international investors.

Stock Connect, a mechanism created in 2014, for Chinese investors to trade Hong Kong-listed shares and international investors to trade shares listed in Shanghai and Shenzhen, is now the main channel into China for investors overseas.

Stock Connect saw record turnover in the first three months of this year in terms of both international investors buying Chinese mainland-listed shares, and mainland investors buying Hong Kong-listed shares.

In a separate filing, the HKEX also posted a 13 percent drop in quarterly profit on Thursday, as investment losses offset gains from higher trading volumes.

The Hong Kong bourse operator's net profit fell 13 percent to 2.26 billion Hong Kong dollars (291.58 million U.S. dollars) in the first three months of 2020, from 2.61 billion Hong Kong dollars a year earlier, it said in a statement. Shares of the company fell 3.4 percent after the results.

HKEX's profit decline contrasts with results from other global exchanges, including rival Singapore, whose net profit rose on the back of higher trading volumes.

HKEX's fees from trading rose 45 percent compared with the first quarter of 2019 as average daily trading turnover surged 20 percent amid high market volatility triggered by the new coronavirus pandemic.

But these gains were outweighed by a loss on investments of 47 million Hong Kong dollars as compared to gains of 882 million Hong Kong dollars a year earlier due to a global markets rout.

(With input from Reuters)