Core Viewpoint - The Hong Kong stock market is expected to transition to a "T+1" settlement cycle after 33 years, which will significantly shorten the settlement period for investors and enhance market efficiency [1][5][7]. Group 1: Settlement Cycle Changes - The Hong Kong stock market has been using a T+2 settlement cycle since 1992, despite implementing T+0 trading [1][7]. - The proposed shift to T+1 is anticipated to reduce systemic risks and improve market efficiency [1][8]. - Currently, markets such as mainland China, the US, Canada, Mexico, Argentina, and India already operate on a T+1 settlement cycle, with Europe expected to follow by 2027 [5][6]. Group 2: Market Impact - The total market capitalization of the Hong Kong stock market reached HKD 42.7 trillion by mid-2025, a 70% increase over the past decade, with average daily trading volume rising by 246% to HKD 240.2 billion [7]. - The transition to T+1 is expected to enhance liquidity, reduce transaction costs, and improve capital utilization for both retail and institutional investors [8][9]. - The T+1 settlement cycle will also facilitate faster capital turnover, allowing investors to reinvest funds more quickly [8][9]. Group 3: Challenges and Considerations - The implementation of T+1 will require significant adjustments in operational models for brokers and banks, including the need for system upgrades to handle the reduced settlement time [9][10]. - The complexity of multi-currency settlements in the Hong Kong market poses additional challenges compared to markets with single currency settlements [9][10]. - The transition will also affect the Hong Kong Stock Connect program, which currently operates on a T+2 basis, necessitating adjustments for mainland investors [10][11]. Group 4: Future Opportunities - The T+1 settlement cycle is expected to encourage the development of diverse trading strategies, such as arbitrage between A-shares and H-shares, and enhance trading activity among southbound funds [11]. - The overall acceleration of settlement processes is projected to boost trading efficiency in the Hong Kong securities market [11].

Group 1 - Citigroup increased its stake in Alibaba Group Holding Limited from 3.66% to 5.60% as of July 14 [1]

Core Viewpoint - Citigroup increased its stake in Alibaba Group Holding Limited (Alibaba-W) from 3.66% to 5.60% as of July 14 [1] Group 1 - Citigroup's ownership in Alibaba-W has seen a significant rise, indicating increased confidence in the company's prospects [1]

Core Viewpoint - The report highlights significant adjustments in the heavy holdings of Liu Gesong's six funds managed by GF Fund, particularly in the new energy vehicle and semiconductor sectors, with a notable shift towards new consumption, internet, and military industries [1][2]. Fund Holdings Adjustment - Liu Gesong's funds have reduced their positions in several previously favored stocks, including: - North Huachuang: Holdings decreased by approximately 17.69% to 161,240 shares [2]. - Seres: Holdings reduced by 9.14% [6]. - EVE Energy: Holdings decreased by 4.16% [6]. - JinkoSolar: Holdings down by 10.77% [6]. - Conversely, there has been a significant increase in holdings of stocks such as: - DeYe Co.: Increased by 40% [3][8]. - Xichuang Data: Increased by nearly 76% [3]. - Xiaomi Group-W: Increased by 25.66% [7]. Fund Performance - The overall performance of Liu Gesong's funds in Q2 was underwhelming, with all funds experiencing net redemptions: - The best-performing fund, GF Multi-Dimensional Emerging, recorded a net value growth rate of 7.91% [4]. - Other funds, such as GF Small Cap Growth A and C, reported growth rates of 2.38% and 2.28%, respectively [4]. - GF Innovation Upgrade and GF Technology Pioneer recorded negative returns [4]. Market Context - The A-share market saw mixed performance in Q2, with the Shanghai Composite Index rising by 3.26% and the Shenzhen Component Index slightly declining by 0.37% [5]. - Key sectors such as military, banking, and telecommunications showed significant gains, while sectors like food and beverage, home appliances, and steel performed poorly [5]. - Liu Gesong remains optimistic about the domestic economy's resilience, citing factors such as the easing of geopolitical tensions and supportive domestic policies [5].

Group 1: Hong Kong Capital Market Performance - Hong Kong's capital market has rapidly recovered in 2025, with significant capital inflow and the highest IPO fundraising globally [1][3] - The total equity financing in Hong Kong reached 2897.40 billion HKD, with IPOs contributing 1240.06 billion HKD, reflecting year-on-year increases of 286.52% and 584.22% respectively [4] - The number of IPOs in Hong Kong has increased to 304, with 51 companies listed, indicating a 14.29% rise in quantity [4] Group 2: Intermediary Institutions' Business Surge - Intermediary institutions in Hong Kong, including brokers, law firms, and accounting firms, are experiencing a surge in business due to the active IPO market [3][5] - The issuance fees for 51 listed companies in 2025 reached 53.40 billion HKD, nearly matching the total for the entire year of 2024 [3] - Major accounting firms have seen significant increases in their audit and advisory services due to the heightened demand from IPO activities [5][6] Group 3: Future Outlook for IPOs and Intermediaries - The second half of 2025 is expected to maintain or even increase the IPO activity in Hong Kong, with over 200 companies having submitted listing applications [9] - The demand for legal services has surged, with law firms completing 15 IPO projects in the first half of 2025, reflecting a growth rate exceeding the industry average [5][6] - Intermediary institutions are optimistic about the future, anticipating continued growth driven by favorable policies and international capital inflow [8][9] Group 4: Real Estate Market Recovery - The demand for office space in Hong Kong's core business districts is showing signs of recovery, driven by the active IPO market [10][12] - The rental prices for Grade A office buildings in Central have dropped nearly 45% from their peak in 2019, making them attractive to financial institutions [11] - The resurgence in the IPO market is expected to positively impact the leasing demand for office spaces, particularly in Central [13] Group 5: Growth in Hong Kong's Tech Sector - The strong performance of the capital market has revitalized Hong Kong's tech sector, with a notable increase in the number of startups [14][15] - The number of startups in Hong Kong reached 4694 in 2024, a 10% increase from 2023, with significant growth in health, medical, and green technology sectors [14] - Investment in Hong Kong's tech sector is projected to rise, with venture capital funding expected to grow from under 500 million USD in 2015 to 5 billion USD by 2025 [17]

Core Viewpoint - The Hong Kong office market, particularly in the Central business district, is showing signs of recovery driven by a resurgence in the capital market and IPO activities, despite challenges such as high vacancy rates and new supply [1][2][3]. Group 1: Market Trends - The Hong Kong Exchange's acquisition of a commercial building for HKD 6.3 billion signifies a major transaction in the office market, reflecting confidence in the sector [1]. - Reports indicate that while the office market faces pressure from new supply and high vacancy rates, there are emerging signs of recovery, especially in Central [2][3]. - As of June 2025, Grade A office rents in Central are expected to have dropped nearly 45% from their peak in 2019, making it an attractive option for financial institutions [2]. Group 2: Demand Drivers - The demand for premium office space in Central is primarily driven by financial institutions, particularly as more mainland companies list in Hong Kong, which is expected to boost leasing activity [2][4]. - The first half of the year saw a notable demand from mainland financial, insurance, real estate, and professional services firms for quality office spaces in core business districts [3]. - Smaller tech companies and startups are also entering the market, seeking affordable office spaces ranging from 200 to 500 square feet [3]. Group 3: Future Outlook - The recovery of the Hong Kong capital market is attracting more Western financial institutions to the office market, with several large leasing contracts signed recently [4]. - The IPO market's activity is anticipated to positively influence the demand for office spaces, particularly in Central, with expectations of rental stabilization in the second half of the year [4]. - A differentiated market trend is expected, with core areas stabilizing while non-core areas may continue to face pressure, dependent on global economic conditions and the absorption of new supply [4].

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) has released a discussion paper aimed at shortening the settlement cycle for the stock cash market from T+2 to T+1, encouraging market participants to discuss how and when this change can be implemented [1][2]. Group 1: Market Context - Hong Kong is one of the most active capital markets globally, with over 2,600 companies listed and an average daily trading volume exceeding HKD 240 billion in the first half of 2025 [2]. - The current T+2 settlement cycle has been in place since 1992, attracting global investors and fostering a robust financial ecosystem through active corporate financing and cross-border investment flows [2]. Group 2: Global Trends - Other major global markets have transitioned to T+2 settlement cycles over the past 20 years, with many now considering or adopting T+1 or shorter cycles [2]. - Markets currently using T+1 settlement include mainland China, the United States, Canada, Mexico, Argentina, and India, with an expectation that by 2027, 88% of global stock market transactions will utilize T+1 or T+0 settlement cycles [2][3]. Group 3: Benefits and Challenges - Transitioning to a T+1 settlement cycle could enhance market efficiency, reduce systemic risk, and align the Hong Kong market more closely with international standards [3]. - Challenges include addressing time zone differences, foreign exchange conversions, and the need for market participants to upgrade systems and automate processes to maintain operational efficiency [3]. Group 4: Implementation and Participation - The discussion on the settlement cycle is limited to the secondary market for stock cash transactions and does not involve primary market settlements [3]. - The HKEX encourages all market participants to submit their suggestions by September 1, 2025, to help establish a timeline for implementation [3]. - HKEX's CEO emphasizes the importance of collaboration within the financial community to adapt to evolving global market conditions and optimize the financial infrastructure [3].

Group 1 - Hong Kong is entering a new era as a global financial hub, with significant inflows of southbound capital and a revaluation of "cheap Chinese assets," leading to a more than 20% increase in the Hang Seng Index, outperforming major global indices [1][10] - The Hong Kong Stock Exchange (HKEX) has seen a resurgence in IPO activity, with the first half of 2025 witnessing a fundraising amount of 106.7 billion HKD, surpassing the total for 2024 and marking the highest level since 2022 [5][7] - The introduction of the "FINI" system by HKEX aims to shorten the settlement period for new stocks from T+5 to T+2, enhancing liquidity and attracting more international investors [9][19] Group 2 - The influx of southbound funds has significantly reshaped the Hong Kong stock market, with net inflows exceeding 730 billion HKD in the first half of 2025, reaching 90% of the total for the previous year [10][11] - The number of companies in the IPO pipeline has reached 220, with notable firms like Luxshare Precision and Stone Technology planning to list in Hong Kong [8] - The HKEX has implemented policies to simplify the secondary listing process, attracting large A-share companies and early-stage tech firms, thereby invigorating the market [7][12] Group 3 - The recent IPO boom has been characterized by high oversubscription rates, with 96% of new listings in the first half of 2025 receiving oversubscription, and some companies experiencing oversubscription multiples exceeding 5000 times [6][7] - The role of cornerstone investors has increased, with 45.2% of IPOs in 2025 involving these investors, up from 31% in previous years, indicating a growing interest from international long-term funds [11][12] - Hong Kong's regulatory framework for virtual assets is evolving, with the recent passage of the "Stablecoin Ordinance" aimed at establishing a clear regulatory environment for digital assets [16][17] Group 4 - The strategic positioning of Hong Kong as a gateway for mainland Chinese companies seeking international capital is reinforced by its favorable tax environment and robust legal framework [20] - The HKEX is actively promoting its market as a platform for companies with global expansion plans, facilitating financing and mergers through its listing options [14][19] - The ongoing digital transformation and regulatory innovations in Hong Kong are expected to enhance its competitiveness as a global financial center, particularly in the realm of virtual assets [18][19]

Group 1 - As of July 16, 2025, the Hong Kong Stock Connect Non-Bank ETF (513750) reached a record size of 7.451 billion, with a year-to-date growth of 844.35% [1] - The ETF's latest share count is 4.840 billion, also a record high since its inception [1] - The index tracking the non-bank financial theme (931024) experienced a decline of 0.82% on the same date, with mixed performance among constituent stocks [1] Group 2 - The Hong Kong Stock Connect Non-Bank ETF has seen a net asset value increase of 74.06% over the past year, ranking 57 out of 2915 index stock funds, placing it in the top 1.96% [2] - The ETF's highest monthly return since inception was 31.47%, with the longest consecutive monthly gain being 4 months and a total increase of 38.25% [2] - The top ten weighted stocks in the index account for 77.92%, with major holdings including China Ping An, AIA, and Hong Kong Exchanges and Clearing [2] Group 3 - Recent policies aimed at enhancing financial market construction and expanding high-level financial openness are expected to create significant business opportunities for non-bank financial institutions [3] - The insurance sector is anticipated to benefit from new regulations promoting long-term investments, while brokerage firms are expected to maintain high trading activity levels [3] - The Hong Kong Stock Connect Non-Bank ETF is the first and only ETF tracking the non-bank index, with over 60% of its composition in insurance stocks [3]

Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Insights - As of the end of June, the company's PE ratio stands at 37.51x, which is at the 55th percentile historically since 2016, indicating a certain level of investment value. It is expected that with the continued enhancement of the mutual access policy in the Hong Kong capital market, liquidity in the Hong Kong stock market will continue to rise, leading to an increase in overall market activity and valuation. The company is projected to achieve revenues and other income of HKD 27.4 billion, 29.9 billion, and 32.4 billion for 2025-2027, with net profits attributable to shareholders of HKD 16.8 billion, 17.6 billion, and 19.4 billion, corresponding to PE valuations of 32.2x, 30.8x, and 27.9x respectively [2][48]. Market Environment - The Hong Kong stock market continued its upward trend in June, driven by domestic policy support, with the Hang Seng Index and Hang Seng Tech Index rising by 20.0% and 18.7% respectively compared to the end of 2024. The average daily trading volume (ADT) for the Hong Kong Stock Exchange in June was HKD 230.2 billion, reflecting a month-on-month increase of 9.4% and a year-on-year increase of 106.9% [11][17]. - The IPO scale in June saw 15 new stocks listed, totaling HKD 27.9 billion, which is a significant year-on-year increase of 606% despite a month-on-month decrease of 51% [27][28]. Business Segments - **Spot Market**: The overall Hong Kong stock market showed high trading activity, with the ADT for the Hong Kong stock market reaching HKD 230.2 billion in June, up 9.4% month-on-month and 106.9% year-on-year. Northbound trading ADT was HKD 162.9 billion, and southbound trading ADT was HKD 120.8 billion, reflecting increases of 7.5% and 27.9% month-on-month respectively [8][17]. - **Derivatives Market**: In June, the average daily volume (ADV) for futures was 57.3 million contracts, down 2.4% month-on-month and 8.4% year-on-year, while the ADV for options was 82.0 million contracts, up 1.9% month-on-month and 9.7% year-on-year [21]. - **Commodity Market**: The LME daily average trading volume in June was 749,000 contracts, reflecting increases of 6.0% month-on-month and 11.2% year-on-year [24]. - **Primary Market**: The number of new listings in the Hong Kong stock market for the first half of 2025 reached 43, with a total scale of HKD 1,067 billion, representing a year-on-year increase of 688.6% [27]. Investment Income - As of the end of June, the HIBOR rates for 6 months, 1 month, and overnight were 2.38%, 0.73%, and 0.03% respectively, showing a month-on-month increase while year-on-year rates have decreased [36].