A larger banker of life tasked with taking over Hong Kong’s global exchange

In early January, following the untimely departure of its executive director, the Hong Kong Stock Exchange was stalled in discussions over a crucial employment decision for its future as the heart of the most important financial center. of Asia and a bridge between China and Western capital markets.

The choice of who will lead Hong Kong’s Exchange and Clearing has been narrow: go with tradition and set up someone from mainland China or Hong Kong to establish the ship at a turbulent time for the city and its relationship with Beijing. Or jump on a Portuguese-speaking Argentine with a Croatian passport and a nickname – Gucho – known in business plans and consulting rooms in London, New York and Buenos Aires.

To the amazement of a Hong Kong establishment who assumed that 2021 was a time for conservatism over adventure, HKEX in February chose Nicolas Aguzin – a former head of operations in Asia at JPMorgan, resident in Hong Kong since 2012 and a banker known internally for his stratospheric growth through the American group.

Aguzin joined JPMorgan in 1990 in Buenos Aires. At the time JPMorgan’s executive director Jamie Dimon signed the press release announcing Aguzin’s new job at HKEX, he too was using the Gucho brand – a Spanish word game that induces his reputation as a great character. “Gucho is an exceptional leader and a human being,” Dimon flashed.

Prior to his first day as head of HKEX on Monday, the focus around Aguzin’s appointment was on what the 52-year-old isn’t – a Chinese speaker. But that focus, say former JPMorgan colleagues and former financial industry figures, misses the purpose of the appointment. Aguzin, known at JPMorgan as a smooth trader and a complete trader, was led to revive the global ambitions of a stock market in danger of becoming too dependent on tight regional flows and Beijing’s changing impulses.

“In recent years, the Hong Kong stock exchange has made repeated strides to gain a foothold in China, and has not even worked hard to connect with the world,” wrote Weijian Shan, president of PAG, one of the largest of Hong Kong investment groups, in the Chinese magazine Caijing. “As a foreigner, Gucho needs to better understand how to make efforts in this area, which can contribute unique value to the Hong Kong stock market.”

Others see a more immediate prospect of new business. “I can see him convincing Southeast Asian and Latin American companies to list here,” said one person who worked closely with him.

Aguzin does not inherit a firm in difficulty. The legacy of his predecessor in HKEX – another former banker JPMorgan – Charles Li it is widely seen as very successful. He devoted his ten-year direction to promoting close cooperation with the continent’s exchanges in Shanghai and Shenzhen. It is a pioneer of schemes that have led to major investment flows in and out of mainland China via Hong Kong.

Under Li’s tenure, the market capitalization of HKEX companies has more than doubled to HK $ 53tn ($ 6.7tn) and was the most popular global location for the first seven public offerings in the last 12 years. . The companies have raised $ 398 billion by 2020, the highest year in a decade. IPOs and trade flows have hit record volumes in recent months.

HKEX’s £ 32 trillion bid for the London Stock Exchange Group was launched as the world’s focus was on anti-government protests in Hong Kong rather than on the strength of its stock market. © AP

But Li also acknowledged that the exchange had become heavily dependent on Chinese capital and liquidity. Chinese companies now account for more than half of those listed in Hong Kong, and more than three-quarters of the total value of listed companies.

Li’s attempts to rectify this came in the form of a £ 32 billion surprise bid to buy the London Stock Exchange Group in 2019 which it erupted quickly and humiliatingly. Launched when the world’s attention was on anti-government protests in Hong Kong rather than on the strength of its stock market, the failure also highlighted the difficulties in harmonizing economic and political interests between Asia and the West.

A board member of HKEX has complained about the resumption of aborted LSE and said an international merger should be a priority under Aguzin’s leadership. “It should have been done some time ago,” they said, adding at the same time Beijing and Hong Kong would gain from linking more closely the West to Chinese capital markets.

Many people close to JPMorgan said Aguzin’s appointment signaled that the exchange had not given up on securing a significant international merger, perhaps even another inclination towards the LSE.

If this is his first major initiative, say former JPMorgan colleagues, it will be based heavily on Gucho’s skills as a negotiator and diplomat. Its focus may be on business, but another duty will be joined by the broader effort to protect Hong Kong’s reputation as Asia’s international financial center following Beijing’s imposition of a controversy. national security law and severe restrictions at the coronavirus boundary. HKEX may be forced to fight hard to get regulatory approval for any agreement in many Western countries depending on the status of its relations with China.

$ 1.3m

Nicolas Aguzin’s basic annual salary at HKEX

“If Hong Kong has a real desire to be the first place in the world in the next decade that lists the best companies, have someone who is global and who understands well the emerging markets, since it has grown into one, but it has been trained in world-class institutions, Nick makes a lot of sense, ”says Micky Malka, a Venezuelan venture capitalist and former partner of Aguzin.

As HKEX chief, Aguzin will receive an annual salary of $ 1.3 million, about 7 percent more than Li. It will also receive 211,756 shares – currently worth around HK $ 100m – which can be sold in full after two years of service, plus a performance bonus. However, the pay bubble is unlikely to be their main incentive. Aguzin’s fortunes lie well into the millions of dollars in double digits, in part with its stake in MercadoLibre, Latin America’s response to Amazon and Alibaba. Aguzin, a board member of MercadoLibre, has sold about half of its shares in the company in recent years for more than $ 7 million.

Marcos Galperin, the Argentine billionaire who founded MercadoLibre, described Aguzin as “persevering.” Aguzin was the lead banker of IPO MercadoLibre, with the company’s market capitalization now at $ 69 billion. “I met him in 2001 when we were a scrappy start-up with less than $ 10m in revenue and he was with JPMorgan,” Galperin said. “I told him we would never hire an investment banker. He went six years and led our IPO.”

Aguzin did not explain either his immediate plans at HKEX or his long-term vision. He delivered his first keynote address at the London Metal Exchange’s Asia Summit last week to remind his audience that Argentina was a country known for its “wine, steak, football and tango” but on to the question of Hong Kong’s position in China’s larger history, he referred guardians to the “key role” of the city.

On Friday, in a video posted by HKEX, Aguzin said it was “even the first days” to talk about strategy, but said he wanted to grow the exchange by remaining “China anchored.”

“He could have done everything he wants and the fact that he wants to be head of the Hong Kong stock exchange tells you a lot about his appetite for risk and making an impact,” Malka said. “He’s always had the JPMorgan brand shield, but now it’s him, his career, his face. Taking this job shows that he has a very entrepreneurial mindset. An Argentine who runs things in Asia – it’s a dance ”.

By the end of his first week, those close to Aguzin had begun to face his lack of Mandarin skills: Chinese-speaking friends had explained that his name had given greater significance to his nickname. To those who speak Chinese, a friend told him, Gucho sounds similar to characters to “take care” of a society and “raise” funds.

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