Leighton Mok, the vice president of the fledgling Micro Connect Macao Financial Assets Exchange (MCEX), spoke about the exchange’s work at a business gathering this morning.
Addressing a breakfast meeting of the France Macau Chamber of Commerce (FMCC), Mok said the MCEX was tapping into China’s highly underserved micro and small business sector, which he pointed out had a GDP contribution of 10 trillion dollars in 2021, or “over 60 percent of China’s GDP.”
[See more: Macao is home to the world’s first DRO exchange]
The MCEX was launched last year to trade first-of-their-kind financial products known as daily revenue obligations (DROs). The products give investors the ability to purchase part of the future revenues of China’s small and micro enterprises.
Unlike shares, which require a business owner to forfeit a portion of their company, DRO’s are an accessible method of financing that requires businesses to forgo between 10 and 20 percent of their earnings in return.
In this way, Mok said MCEX intended to create a “new avenue of investment” for investors and a “new way to raise money” for small businesses. He said that the platform was able to collect accurate revenue data and cash flows by taking full advantage of China’s highly developed e-payment infrastructure and collaborating with leading banks and retail brands.
The potential of the new platform for scaling small businesses was revealed through an investment case study involving a hair salon that initially started with only 50 stores, but was able to grow to over 200 stores thanks to capital from MCEX.
[See more: Guangdong will issue its first ‘green’ offshore bonds in Macao this month]
Mok noted that since its inception in 2021, Micro Connect, the operator of MCEX, had helped to fund more than 12,300 stores across 270 mainland Chinese cities. It was also looking to expand into Southeast Asia, Singapore and Hong Kong in the future.
The FMCC’s next breakfast talk is scheduled for 28 February.
