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A good financial market infrastructure (infrastructure) is at the core of a successful financial services industry, said Charles Li, Chief Executive of HKEX. When people have faith in your infrastructure, they will be willing to trust their money to you, he added. Charles believes economic freedom and the rule of law are the key advantages for the further development of Hong Kong’s financial services industry. He also believes the rise of China’s economy reinforces Hong Kong’s role as the premier gateway to China. The young people of Hong Kong should leverage the competitive advantages they gain from living in their city, he said.
Treasure the benefits of China’s reform era
In 1990s, Charles was a young lawyer in the Wall Street. He facilitated the first batch of overseas financing projects of the Chinese government and Mainland enterprises, and rapidly became the leader of Merrill Lynch China and later JP Morgan China. He is grateful his career began about 25 years ago. "My generation is fortunate because we happened to be living in the time of China's reform and opening. Much of our success was a result of the era, which gave us a chance to become a bridge between the east and the west,” he said.
Charles said this is the beginning of another era. He believes the younger generation nowadays has an even heavier duty and a longer path ahead. "Three decades ago, China was completely closed and undeveloped. The economy was very small. Today, China has the second largest economy in the world, with just one bigger economy next to it and that is the US. The development of China in the future could bring fundamental changes to the world.” He suggests young people set their sights high and aim to make an impact on China and the world.
Charles believes in both the financial services industry and the young people of Hong Kong. He hopes the young generation will grasp the opportunities in the industry and see this as the start an exciting chapter in their life.
Hong Kong - still the gateway to China
The ratio of GDP to total stock market capitalisation is about 1:1 in most places. However, Hong Kong’s ratio is as high as 1:13, if not 1:14. Charles attributes this to China. “Hong Kong has a tiny body (economy) with a gigantic hat (financial market). This is simply because it is positioned at the top of a huge mountain (China),” he said. He explained Hong Kong is still the gateway to the Mainland, and as China continues to gain higher status internationally, the importance of Hong Kong to the world will rise to new heights. Since the Chinese market is yet to fully open up, Hong Kong can still act as a conduit into and out of China, he said.
Excellent opportunities for Hong Kong’s financial services industry as city evolves
At the beginning of China’s era of reform and opening up, trading and shipping businesses in Hong Kong contributed immensely to the changes. After a long period of sustained economic growth in China, some of these businesses have become constrained by the lack of space in Hong Kong. Their importance to the China economy has diminished in recent years.
Charles said when industries rely heavily on physical resources, their business can easily run into bottlenecks when they reach a certain stage. If there is strong economic growth like China’s, they will find it hard to keep pace. However, in the financial services industry, an expanding economy usually brings many opportunities and the industry’s development won’t be subject to the availability of a lot of physical resources.
“The development of the financial services industry does not require land. It does not need machines or physical labour to produce anything. A good system is the core of the industry. When people have faith in your financial market infrastructure, they are willing to put money in and the industry will thrive," Charles said. He uses London’s offshore US dollar market as an example – its size is similar to the onshore market in the US. This demonstrates the importance of a reliable system, he said.
“Aligned with international standards, Hong Kong’s open market, legal framework and regulatory regime strengthen the city’s position as one of the world’s leading financial centres. These are the key advantages of Hong Kong’s financial services industry as well. Young people raised in this city naturally inherit many competitive advantages. As a result, I believe there are ample opportunities for them in the financial services field,” Charles said.
When Charles was young...
"It's nearly 40 years ago! Being an oil rigger, I had to work on a fixed platform in the sea. The conditions were not good but it was a lot of fun for young people. We could have crabs all the time - just by throwing a net into the sea!" There was a smile on Charles' face as he recalled the old days.
He never had a chance to go to high school. He later went directly into Xiamen University to study English literature after the advanced-level public examinations resumed. After graduation, he was assigned to work as a reporter for China Daily, an English-language newspaper. "This photo (Image 1) was taken in the commentary department. Right in front of me was a Flying Fish typewriter which was so heavy that you could kill someone with it. Next to it was a dictionary. I had to write in English every day and it was really difficult," he remembered.
Charles got married soon after he started working. In 1986, the couple decided to study overseas. They worked very hard to get scholarships to go together to the US where Charles studied journalism and then law. He worked as a dishwasher to help support himself and his wife. During those years, they never had a chance to meet with their parents. Life was tough but Charles was content because he felt things were getting better day by day.
Being content, optimistic and able to overcome adversity are probably the keys to success for Charles, who was once an oil rigger, then a Wall Street lawyer, an international investment banker, and today is the Chief Executive of HKEX.
Bachelor of Arts (English Literature), Xiamen University, China
Master of Arts (Journalism), University of Alabama, US
Juris Doctor, Columbia University, US
Brown & Wood, New York - associate (1993-1994)
Davis Polk & Wardwell, New York - associate (1991-1993)
JP Morgan China - chairman (2003-2009)
Merrill Lynch China - (1994-2003: president (1999-2003))