Hong Kong's Stock Market History: A Legacy Full of Ups and Downs

Hong Kong is undoubtedly the city with the most enthusiasm for the stock market worldwide. Hardly a new mobile phone is released without pre-installed software for stock and options trading with a swipe of the thumb; the shop windows of major banks are adorned with live quotes of the most traded companies. We owe this stock market fever to Ronald Li, who passed away this week at the age of 85. Li, known as the “Godfather of the Stock Market,” created one of the largest and most dynamic trading venues globally in the spring of 1986 by merging four smaller exchanges in the city. Its modern successor, Hong Kong Exchanges & Clearing, is today considered the largest exchange operator in the world with a market value of nearly 26 billion US dollars. Through the introduction of a computerized trading system and a transaction levy, Li gained a reputation as a stock market visionary since founding the Far East Stock Exchange in 1969. However, his career experienced a sudden decline. During the stock market crisis in October 1987, Li closed the exchange for four days, which led to fierce criticism and a dramatic drop upon reopening. Worse was to come: three months later, shortly after his resignation as chairman of the exchange, the city’s anti-corruption agency opened an investigation against him. He was eventually convicted of bribery for accepting benefits in exchange for stock listings. His wealth was once estimated at 20 billion Hong Kong dollars (2.6 billion US dollars), making the scandal all the more incomprehensible. Mr. Justice Kemal Bokhary, who judged Li’s case, found clear words: “You are a very wealthy man by any standards, and you have even less excuse for your actions than a poor man.” This conviction led to significant changes in Hong Kong’s stock exchange rules, specifically the listing guidelines, to meet international standards. This process is ongoing: two years ago, the Hong Kong regulator announced significantly stricter rules to prevent fraudulent listings and prepare for the next wave of listings from mainland China. After his release from Stanley Prison in 1993, where he spent over two and a half years, the 63-year-old Li planned to retire and play golf. A brief stay in Canada ended with a judicial deportation order due to his criminal record. He spent his final years mostly in Thailand but returned to Hong Kong in 2012 after being diagnosed with stomach cancer. Li will also be remembered for his short temper and sharp tongue. At a press conference after the market closed on Black Monday, he threatened to sue a reporter. In 1982, he remarked that those who did not worry about Hong Kong’s uncertain political future were either liars or fools. His family includes several influential figures in Hong Kong. His brother Simon, who died in 2013, was Hong Kong’s first Chinese Chief Justice. His nephews include, among others, the Chairman of the Bank of East Asia, David Li, and the former Education Minister Arthur Li.