EXCLUSIVE INTERVIEW
C harles Li is renowned as a pioneer within Asia’s financial markets. Having started his working life as a teenager in the oilfields of north-eastern China, it was in the 1990s that he emerged as an up-and- coming lawyer on the Wall Street scene, before further rising to serve in leadership roles at international banks, Merrill Lynch and JPMorgan. But it is perhaps his service from 2010 as chief executive of Hong Kong Exchanges and Clearing (HKEX) that solidified his status within the region’s capital markets. He orchestrated a number of strategic initiatives that would transform Hong Kong’s position as a truly international finance hub, including the bourse’s acquisition of the London Metal Exchange (LME) in 2012, and the introduction of key listing reforms in 2018. While he may have retired from the stock exchange in 2020, the sixty-something football fanatic is far from sitting on the sidelines. In fact, following his successful introduction of the Stock Connect cross-border trading schemes in 2014 and Bond Connect in 2017, he is set to score a hat-trick through the launch of his new consumer-focussed vision: Micro Connect. Founded in early 2021 alongside his contemporary, Gary Zhang, the digitally forward Hong Kong and Shenzhen-based firm has a clear objective: to alter China’s financial ecosystem through a new asset class for trade and investment – daily revenue contracts (DRCs). In line with the market’s ambition to deliver 'Common Prosperity', Micro Connect seeks to identify quality investment opportunities in China’s vibrant – but crucially, underserved – micro, small and medium enterprise (MSME) economy. Its ultimate aim? To connect global capital with China’s consumer cash flow. So far, the firm has invested in 2,300 brick- and-mortar stores in 164 cities, across 168 sub-sectors ranging from food and beverage (F&B) to culture and sports, and it is cultivating a proprietary data platform. With a live US dollar-denominated fund, and a recently acquired licence to operate a Financial Assets Exchange in Macau, it plans to invest in over 500,000 shops over the next five years. Q: How did you conceive of the idea for Micro Connect, alongside Zhang? A: Gary and I have been friends for a quarter of a century now. We met in Tianjin back in the mid-1990s, during the early days of red chip IPOs. Over the years, we’ve formed a habit of getting together to discuss projects and pick up ideas. Although we pursued quite distinct career journeys, we kept in touch. While I was involved in landmark deals at HKEX, Gary was involved in exciting projects related to biotech and Belt and
“We wanted to find a way to leverage China’s digital progress to expand beyond the financing available via traditional markets, to support the ‘little guys’.”
Road. We are both adventure-seeking individuals. Towards the end of my tenure at HKEX, I started considering what to do next. I bounced around ideas with a few close contacts that I trusted and during our spare time, we began exploring business proposals. The underlying theme was clear: we wanted to find a way to leverage China’s digital progress to expand beyond the financing available via traditional markets, to support the “little guys” – China’s mom-and-pop shops, its MSMEs, which is where real money can be made. It was at this point that I started to involve Gary in periodical Zoom calls. We were right in the middle of the pandemic and things developed quite rapidly. As Covid-19 meant that we couldn’t go to an office or go out to eat, we would hike together in the mountains. We became quite committed to this activity and as we spent more time discussing the idea behind Micro Connect, we began to think “this is going to work, this is going to be very new”. In 4Q20, I departed the exchange and embarked on setting things up. I camped out in Gary’s office for a
Gary Zhang
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FINANCEASIA.COM
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