Hong Kong Exchanges To Change Tack, Intensify Effort To Capture China Commodity Demand

The operator of Hong Kong's stock exchange said Thursday it would look to commodities for growth as opportunities in the equities market slow, and as the window for capturing China's explosive commodity demand narrows, marking a radical strategy shift for the global king of initial public offerings.

Hong Kong Exchanges & Clearing Ltd. (0388.HK) Chief Executive Charles Li said Thursday the exchange, the world's leader in money raised through IPOs for the past three years, cannot rest on its laurels in the equities market and that the commodities sector--though fiercely competitive globally--may offer the best growth opportunities as China increasingly drives the world's commodity consumption and production.

Li said the challenge would be great given the equity-focused exchange's lack of experience in the commodities sphere, where big international players such as Chicago-based CME Group Inc. (CME) and Atlanta-based IntercontinentalExchange Inc. (ICE) dominate, but he said the exchange would rule nothing out, including the possibility of buying a major exchange, in order to achieve its goal of tapping into China's demand for commodity products.

It will also aggressively hire experts to bolster its limited knowledge in the complicated asset class, he said. "Even I as a CEO don't understand it," Li said.

-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002; kathryn.okeeffe@dowjones.com

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