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In early January, following the premature departure of its CEO, the Hong Kong Stock Exchange was closed in debates over a crucial hiring decision for its future as the heart of Asia’s largest financial center and bridge between the China and Western capital markets.
The choice of who would direct Hong Kong’s exchanges and compensations was cruel: go with tradition and install someone from mainland China or Hong Kong to keep the ship in a turbulent time for the city and its relationship. with Beijing. Or play a Portuguese-speaking Argentine with a Croatian passport and nickname – Gucho – known in the commercial halls and at board meetings in London, New York and Buenos Aires.
To the surprise of a Hong Kong establishment that assumed 2021 was a time for conservatism in the face of adventure, HKEX in February chose Nicolas Aguzin – former head of Asian operations at JPMorgan, resident in Hong Kong since 2012 and banker known internally for his stratospheric rise through the American group.
Aguzin joined JPMorgan in 1990 in Buenos Aires. When JPMorgan CEO Jamie Dimon signed the press release announcing Aguzin’s new job at HKEX, he even used the Gucho brand, a pun in Spanish that hints at his reputation as a great character. “Gucho is an excellent leader and human being,” Dimon rushed.
Ahead of his first day as head of HKEX on Monday, the focus around Aguzin’s appointment has focused on what a 52-year-old, Chinese-speaking man is not. But that approach, say former JPMorgan colleagues and senior financial industry personalities, misses the purpose of the appointment. Aguzin, known to JPMorgan as a loose trader and a consummate negotiator, has been introduced to rekindle the global ambitions of a bourse in danger of relying excessively on Beijing’s narrow regional flows and shifting impulses.
“In recent years, the Hong Kong Stock Exchange has made repeated strides in reaching China, and has still worked hard to connect with the world,” wrote Weijian Shan, president of PAG, a of the largest companies in Hong Kong. investor groups, in the Chinese magazine Caijing. “As a foreigner, Gucho should better understand how to make efforts in this area, which can bring unique value to the Hong Kong stock market.”
Others see a more immediate perspective of new business. “I can see him convincing companies in Southeast Asia and Latin America to be included,” said one person who worked closely with him.
Aguzin does not inherit any troubled company. The legacy of his predecessor to HKEX – another former JPMorgan banker – Charles Li it is widely seen as a great success. He devoted his ten-year leadership to promoting close cooperation with the mainland exchanges in Shanghai and Shenzhen. He pioneered schemes that have led to higher investment flows in and out of mainland China through Hong Kong.
Under Li’s tenure, the market capitalization of HKEX companies doubled to more than A $ 53 billion ($ 6.7 billion) and was the world’s most popular site for initial public offerings in seven of the last twelve years. The companies raised A $ 398 billion in 2020, the highest total in a year in a decade. IPOs and trade flows have worked record volumes in recent months.
HKEX’s £ 32bn bid by the London Stock Exchange Group was launched as the world’s attention focused on anti-government protests in Hong Kong rather than the strength of its study © AP
But even Li acknowledged that the change had largely depended 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 companies listed on the stock exchange.
Li’s attempts to correct this came in the form of a surprise bid of £ 32 billion to buy the London Stock Exchange Group in 2019 which he disappeared quickly and humiliatingly. Launched as the world’s attention was active anti-government protests in Hong Kong more than by the strength of its bureaucracy, the failure highlighted the difficulties in harmonizing economic and political interests between Asia and the West.
A board member of HKEX lamented the takeover of aborted LSE and said an international merger should be a priority under Aguzin’s leadership. “It should have been done a long time ago,” they said, adding that both Beijing and Hong Kong would benefit from linking the west more closely with Chinese capital markets.
Several people close to JPMorgan said Aguzin’s appointment indicated that the change had not given up on achieving a major international merger, possibly even another leaning on the LSE.
If this is his first major initiative, JPMorgan’s former colleagues say, it will be based largely on Gucho’s skills as a negotiator and diplomat. Its focus may be on recruitment, but another duty will be to join the broader effort to protect Hong Kong’s reputation as Asia’s international financial center following Beijing’s imposition of a controversial national security law and severe restrictions on the coronavirus boundary. HKEX may be forced to fight hard to get regulatory approval of any agreement in many Western countries, depending on the state of its relations with China.
$ 1.3 million
Nicolas Aguzin’s annual basic salary at HKEX
“If Hong Kong has the real desire to be the number one place in the world over the next decade to list the best companies, to have someone who is global and who understands emerging markets very well, as it grew into one, but 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 head of HKEX, Aguzin will receive an annual salary of $ 1.3 million, about 7% more than Li. It will also get 211,756 shares (currently worth about A $ 100 million) that can be sold in full after two years of service, plus a performance bonus. However, payroll is unlikely to be his main incentive. Aguzin’s fortune reaches millions of dollars in double digits, in part thanks to its stake in MercadoLibre, Latin America’s answer to Amazon and Alibaba. A board member of MercadoLibre, Aguzin 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 main banker of MercadoLibre’s IPO, with a stock market capitalization of $ 69 billion. “I met him in 2001, when we were a crazy start-up with less than $ 10 million in revenue and he was with JPMorgan,” Galperin said. “I told him we would never hire an investment banker. We are six years ahead and he was directing our IPO ”.
Aguzin has not explained either his immediate plans to HKEX or his long-term vision. He used his first speech at the London Metal Exchange Asia Summit last week to remind his audience that Argentina was a country known for its “wine, steak, football and tango,” but on the subject of Hong Kong’s position in Chinese history, he cautiously referred to the “key role” of the city.
On Friday, in a video posted by HKEX, Aguzin said “it was still early days” to talk about strategy, but said he wanted to grow the exchange while remaining “anchored in China.”
“He could have done everything he wants and the fact that he wants to be head of the Hong Kong stock market tells you a lot about his risk appetite and having an impact,” Malka said. “He always had the shield of the JPMorgan brand, but now this is him, his career, his face. Taking on this job shows that he has a very enterprising mindset. An Argentine who runs things in Asia is a ball. “
By the end of his first week, those close to Aguzin had begun to address his lack of Mandarin skills: Chinese-speaking friends explained that his appointment had given more importance to his nickname. For Chinese speakers, a friend told him, Gucho sounds similar to the characters for “taking care” of a company and “raising” funds.
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