Innovation, sustainability and new forces for progress: taking stock from Hong Kong

Since the World Economic Forum Annual Meeting in January this year, the shift in the narrative for the world economy in 2024 has been remarkable.

Then, the possibility of a global recession dominated the conversation; now the IMF forecasts a soft landing, based on faster-than-expected growth in China, India and the United States, plus weakening inflation and the prospect of interest rate cuts.

As the narrative for this year has evolved, however, there’s also been a whole host of developments away from the news cycle that indicate a brighter future for the world beyond 2024.

These developments are driven by the combination of innovation and sustainability and point the way towards sustainable, long-term growth and an acceleration of the green transition.

Take the announcement of a new world record for solar cells made recently by a Chinese solar company. This breakthrough means higher efficiency, more output and lower costs for solar energy. This innovation, plus the rapid advances across the industry, also expands what we can achieve with renewable energy at a time when the whole world is looking for ways to meet carbon-neutral commitments.

Continuing the new energy theme, there has been a host of breakthroughs around electric vehicle batteries in recent months, including higher capacity, water-based batteries in China, cobalt-free lithium battery technologies in Japan and conductivity advances in South Korea that, crucially, could extend battery life, increase efficiency and accelerate charging times.

These are just two of many areas where we see China playing a leading role in driving a new wave of innovation – a wave that is also spreading throughout Asia, as researchers, entrepreneurs and companies get to work on exploring new frontiers.

In agriculture, new technologies being developed by firms in Indonesia and India are helping streamline supply chains and raise crop productivity through digitization.

In the digital realm, a whole range of Asian companies are developing large AI models to predict weather patterns and power demand; sort through and analyze reams of corporate documents to extract business insights; detect cancer at an early stage and potentially save thousands of lives; and analyze satellite data to monitor crop output and find new mineral deposits.

No doubt, these are great developments – and from our vantage point at the heart of Asia’s financial markets, it’s an exciting time for four main reasons.

Firstly, it means new companies will come to market; secondly, it means more opportunities for investors; thirdly, it means new frontiers for global growth and, finally, it gives exchanges the opportunity to do what they do best.

We are a core market infrastructure supporting ideas, empowering innovators, creating jobs and driving the real economy. It’s up to us – exchanges all around the world – to connect capital with opportunities, to drive the technological transformation happening around us and to power the green transition.

Exchanges provide a vital platform for companies to raise capital, essential for scaling operations, fostering innovation, allowing investors to invest and exit with confidence and attracting a diverse pool of investors, capital and expertise.

Furthermore, capital markets support corporate governance and compliance, which underpins investor confidence and market stability. They encourage transparency and informed decision-making, all fundamental for the growth of technology sectors and sustainable economic initiatives.

For exchanges to play our part, we must constantly look for ways to make our markets more attractive.

We can open new routes to capital for issuers, improve liquidity, upgrade our infrastructure to meet the increasingly sophisticated needs of investors and build channels for closer global connectivity.

And, when we get it right, the ripple effect for the whole market and the global economy can be huge.

At HKEX, we are proud of the steps we have taken in recent years.

Our listing reforms have opened new routes to capital for new economy companies, bringing more than 300 new companies to market, including 127 healthcare and biotech companies and raising close to HK$1 trillion (US$0.13 trillion) in the process. Just recently, we welcomed the first listing under our 18C chapter for specialist technology companies and we look forward to many more, bringing more diversity and liquidity to our markets.

Our Connect programmes are going from strength to strength too. Now, celebrating the 10^th anniversary of the launch of Stock Connect in 2014, we are constantly enhancing the programmes’ product ecosystem and trading mechanisms to provide more opportunities for investors and issuers.

The expansion of Southbound Stock Connect in 2023, for instance, to include international companies with a primary listing, means Hong Kong is home to the only market in the world offering connectivity to two massive, uncorrelated pools of capital. A market where companies looking to fund their growth ambitions can access both the global investor pool in Hong Kong and the largely untapped, fast-growing investor base in mainland China.

But we know there is much more left to do. And, as the productive forces powering the world economy evolve, so exchanges must evolve too. We need to be open to continuously revising our understanding of our role, the industry and the world around us and to new points of view and innovative ideas.

Now is the time because the world is changing – fast.

The innovators and new champions detailed here are creating the next frontiers for growth. I’m looking forward to meeting many of them when I attend 'Summer Davos' in Dalian.

It's time to seize the moment, to serve the issuers and investors who depend on us, to support the real economy and to create long-term, sustainable growth for Hong Kong, mainland China, Asia and the world.