HKEX(HK:00388) Zhi Tong Cai Jing·2025-11-06 07:11Core Viewpoint - The report from Open Source Securities indicates that the combination of the AtoH wave and the return of Chinese concept stocks is driving long-term asset expansion in the Hong Kong stock market, leading to sustained net inflows of southbound funds and active trading volumes in the market. The Hong Kong Stock Exchange (HKEX) is expected to benefit from the anticipated foreign capital inflow due to potential interest rate cuts by the Federal Reserve, maintaining a high level of business performance and a "buy" rating for the stock [1]. Group 1 - The active spot ADT is driving significant increases in trading and settlement revenues, with trading fees and system usage fees reaching HKD 7.8 billion, a year-on-year increase of 57%, including spot/derivatives/commodity revenues of HKD 4.7 billion/HKD 2.0 billion/HKD 1.1 billion, which are year-on-year increases of 116%/15%/6% [2]. - The Hong Kong stock market is experiencing a high level of activity, with 69 new listings in the first three quarters of 2025, a year-on-year increase of 53%, and total fundraising amounting to HKD 188.3 billion, more than three times that of the same period in 2024 [2]. - The report highlights that the trading volume increase indirectly boosts custodial, trustee, and agent service fees, as well as market data fees, which have seen year-on-year increases of 25% and 8%, respectively [2]. Group 2 - The investment yield of HKEX has decreased, with a projected dividend yield of 3.0% for 2025, indicating potential for valuation improvement. The net investment income for the first three quarters of 2025 is HKD 3.89 billion, a year-on-year increase of 4% [3]. - The expected dividend yield for 2025, assuming a constant payout ratio of 90%, is 3.0%, while the current yield on U.S. Treasury bonds is 4.10%. The anticipated interest rate cuts by the Federal Reserve are expected to drive foreign capital back into the Hong Kong stock market [3]. - The current price-to-earnings ratio (PE-TTM) for the company is 31.2 times, which is at the 22nd percentile of the past ten years, with a dynamic PE of 30.2 times, indicating potential for valuation enhancement [3].