Group 1 - The Hong Kong stock market has been active this year, with an average daily trading volume exceeding 250 billion HKD, and over 60 companies listed in the first nine months, raising a total of 182.9 billion HKD, making it the top global market for IPOs [1][3] - Currently, around 300 listing applications are being processed by the Hong Kong Stock Exchange, with half of them from new economy sectors such as electric vehicles, renewable energy, artificial intelligence, new materials, and biotechnology [3] - The mutual market access mechanisms, including the Stock Connect programs, are highlighted as a key advantage for Hong Kong, facilitating international capital flow into the mainland market and vice versa since their launch in 2014 [3] Group 2 - The main challenge for the Hong Kong IPO market is to develop a more diversified asset class ecosystem, including fixed income and commodities, to meet the global trend of de-dollarization and investors' demand for diversified asset allocation [4]

Group 1 - Morgan Stanley reports that Hong Kong Exchanges and Clearing (HKEX) will continue to experience strong revenue and profit growth until Q3 2025, driven by a robust average daily trading volume (ADV) of HKD 286 billion and high turnover rates [1] - The report maintains an "overweight" rating for HKEX with a target price of HKD 508, citing increased trading activity in the Hong Kong capital markets as evidence of a financial system cycle bottoming out [1] - For Q3 2025, Morgan Stanley expects core business growth to remain strong, with trading fees and clearing fees increasing by 75% and 97% year-on-year, respectively [1] Group 2 - Morgan Stanley slightly raised its average daily trading volume assumptions for HKEX from 2025 to 2027, while lowering net investment income forecasts for 2025, 2026, and 2027 by 0.2%, 5.5%, and 5.6%, respectively, due to new margin guarantee arrangements effective from Q4 2025 [2] - The firm anticipates a decline in interest rates in 2026 due to Federal Reserve rate cuts, predicting a drop in net investment income of 18% in 2026 and 4.3% in 2027 [2] - Consequently, Morgan Stanley has increased its earnings per share (EPS) forecast for HKEX in 2025 by 5.8%, while maintaining EPS estimates for 2026 and 2027 largely unchanged [2]

Core Viewpoint - Morgan Stanley reports that the strong revenue and profit growth of Hong Kong Exchanges and Clearing Limited (HKEX) is expected to continue until 2025, driven by a robust average daily trading volume (ADV) of HKD 286 billion and high liquidity [1] Group 1: Financial Performance - In Q3, HKEX's trading fees and clearing fees increased by 75% and 97% year-on-year, respectively, indicating sustained strong growth in core business [1] - Revenue and profit for HKEX are projected to grow by 47% and 59% year-on-year, respectively, in Q3 2025, with EBITDA margin expected to increase by 7 percentage points to 80% [1] Group 2: Investment Income - Morgan Stanley anticipates a potential decrease in HKEX's net investment income due to a high base from Q2 foreign exchange gains and the ongoing low interest rate environment, estimating a 22% quarter-on-quarter decline in Q3 2025 [1] - The net investment income forecasts for FY 2025, 2026, and 2027 have been slightly adjusted downwards by 0.2%, 5.5%, and 5.6%, respectively, to account for new margin guarantee arrangements effective from Q4 2025 [2] Group 3: Earnings Forecast - The earnings per share (EPS) forecast for HKEX in 2025 has been raised by 5.8%, with a projected year-on-year growth of 32%, while the EPS for 2026 and 2027 is expected to remain relatively unchanged [2] - A decline of 18% in net investment income is anticipated for 2026, followed by a 4.3% decrease in 2027, influenced by expected interest rate cuts by the Federal Reserve [2]

Group 1 - The core viewpoint is that Hong Kong's capital market has become a significant highlight globally in 2023, with an average daily trading volume exceeding HKD 250 billion and over 60 companies listed, raising a total of HKD 182.9 billion, ranking first worldwide [1][3] Group 2 - There are currently around 300 companies waiting for listing approval, with half of them from new economy sectors such as electric vehicles, renewable energy, artificial intelligence, new materials, and biotechnology [3] - The Hong Kong Stock Exchange aims to diversify its asset classes, focusing on expanding fixed income and other asset categories to meet global investors' needs for alternatives to traditional equities [2][3] Group 3 - Factors contributing to the rise of the Hong Kong stock market include China's economic stimulus policies and the emergence of new technology companies, which have attracted significant global investment [4] - The "secret weapon" for attracting capital and enhancing market activity is the interconnectivity mechanisms, such as the Stock Connect programs, which have facilitated cross-border investments and increased participation from both local and mainland investors [4]

Group 1 - The 2025 Bund Summit will be held from October 23 to 25 in Shanghai, focusing on the theme "Embracing Change: New Order, New Technology" [2] - The summit is co-hosted by the China Financial Forty Forum (CF40) and Tsinghua University (THU), featuring discussions among global policymakers, entrepreneurs, and scholars on the reshaping of the global economy and financial landscape [2] Group 2 - Hong Kong's stock market rebound is attributed to ongoing economic stimulus policies from mainland China and a resurgence of global investor confidence in the Chinese market [4] - As of the first three quarters of this year, the average daily trading volume in Hong Kong exceeded 250 billion HKD, with over 60 companies listed, raising a total of 182.9 billion HKD, making it the top global market for IPOs [4] - Approximately 300 companies are currently in the queue for listing, with about half from new economy sectors such as electric vehicles, renewable energy, artificial intelligence, new materials, and biotechnology [4] Group 3 - The "secret weapon" of Hong Kong is its connectivity mechanisms, including the Stock Connect programs, which allow for two-way capital flow between global and mainland markets [5] - Both southbound and northbound capital flows are active, with increasing participation from global investors in mainland markets and vice versa [5] Group 4 - The Hong Kong Stock Exchange aims to build a more diversified multi-asset ecosystem, expanding beyond its traditional strengths in equities to include bonds, commodities, and other asset classes [6] - The shift from a "single listing center" to a "multi-asset ecosystem platform" is underway, highlighting Hong Kong's pivotal role in the global financial landscape as new economy enterprises emerge and global capital seeks new balance [6]

Group 1 - Morgan Stanley raised its year-end targets for the MSCI Hong Kong Index (MXHK) to 13,000 and 14,000 points, with potential targets for 2026 of 14,366, 15,522, and 16,679 points, indicating potential increases of 8%, 16%, and 25% respectively [1] - The recovery trend in Hong Kong has been significant since 2023, with strong financial market performance and a stabilizing residential property market, making valuations attractive compared to historical levels and other markets [1] - Morgan Stanley maintains a positive outlook for Hong Kong for the next year, favoring stocks such as Hong Kong Exchanges and Clearing (00388), Futu Holdings (FUTU.US), Galaxy Entertainment (00027), MGM China (02282), Techtronic Industries (00669), China State Construction International (03311), Henderson Land Development (00012), and MTR Corporation (00066) [1] Group 2 - Year-to-date, the MSCI Hong Kong Index (MXHK) has returned 26% in USD terms, and its forecasted P/E ratio remains 0.3 standard deviations below the 10-year average, making Hong Kong the cheapest market in the Asia-Pacific region, excluding ASEAN [2]

Core Insights - The CEO of Hong Kong Exchanges and Clearing (HKEX), Charles Li, emphasized the need for a more diversified multi-asset ecosystem to address current challenges [1] - In the context of global investors considering de-dollarization and seeking new balance points, HKEX aims to expand its offerings beyond IPOs and equities to include fixed income, commodities, and other asset classes [1] Group 1 - HKEX's primary challenge is to establish a more diverse ecosystem that includes various asset classes [1] - The focus on fixed income and other asset classes is seen as essential for meeting investor demands [1] - The current global trend of de-dollarization is influencing HKEX's strategic direction [1]

Core Insights - The average daily trading volume of Hong Kong stocks has reached over 250 billion HKD since the beginning of the year [1] - The number of companies listed on the Hong Kong Stock Exchange (HKEX) has significantly increased, with over 60 IPOs and a total fundraising amount of 182.9 billion HKD from January to September, ranking first globally [1] - There are currently around 300 listing applications being processed, with half of them from new economy sectors such as electric vehicles, renewable energy, artificial intelligence, new materials, and biotechnology [1]

Core Insights - The average daily trading volume of Hong Kong stocks has exceeded 250 billion HKD since the beginning of this year [1] - Over 60 companies have listed on the Hong Kong Stock Exchange (HKEX) from January to September, raising a total of 182.9 billion HKD, ranking first globally [1] - There are approximately 300 companies waiting for listing approval, with half from new economy sectors such as electric vehicles, renewable energy, artificial intelligence, new materials, and biotechnology [1] - The main challenge for HKEX is to establish a more diversified ecosystem with multiple asset classes, as it has traditionally been strong in equities but relatively weak in fixed income [1]

Core Viewpoint - Hong Kong Stock Exchange (HKEX) is expected to reclaim the top position in the global IPO fundraising market this year, driven by a strong pipeline of IPOs in the fourth quarter [1] Group 1: IPO Market Outlook - The fourth quarter is traditionally a peak season for new listings, with an estimate of over 20 IPOs expected in the next two months [1] - The total number of IPOs for the year is projected to exceed 100 [1] - Due to the absence of large IPOs after the listing of Sany Heavy Industry, the remaining new listings are expected to raise a significant portion of the total fundraising amount [1] Group 2: Fundraising Projections - The current fundraising amount stands at over HKD 200 billion, with expectations that the remaining IPOs could collectively raise several billion HKD [1] - The total fundraising for the year is anticipated to surpass HKD 300 billion [1]