HKEX(HK:00388) Sou Hu Cai Jing·2025-07-18 10:45Core 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].