Core Viewpoint - The article discusses the rising trend of Real World Assets (RWA) tokenization in the Greater Bay Area, highlighting its potential benefits and challenges for companies seeking to leverage this new financing model [4][5]. Group 1: RWA Tokenization Overview - RWA refers to the tokenization of real-world assets into tradable digital asset certificates using blockchain technology, with over 13 institutions exploring this model in the past two years [4][7]. - Companies are increasingly interested in RWA not just for financing but also for brand exposure and potential stock price enhancement [4][13]. Group 2: Recent Developments and Case Studies - Since 2024, notable companies like Langxin Group and Huaxia Fund have successfully issued RWA projects, with underlying assets including funds, bonds, and real estate [7][8]. - The total market value of global on-chain RWA assets surpassed $25 billion by July 2025, with projections suggesting the market could exceed $10 trillion by 2030 [9]. Group 3: Challenges and Risks - The costs associated with issuing RWA projects in Hong Kong can be high, often exceeding HKD 2.5 million, which may deter some companies from pursuing this route [11][12]. - Not all assets are suitable for RWA; successful tokenization requires stable cash flows, clear legal rights, and verifiable off-chain data [18][19]. Group 4: Regulatory Environment - The regulatory landscape for RWA is still evolving, with a need for clear classification and compliance pathways based on asset characteristics [19][20]. - There are concerns about systemic risks if transparency and custodial measures are not adequately enforced [20][21]. Group 5: Future Prospects - RWA could provide a new avenue for Chinese companies to return to the Hong Kong market, offering a more flexible and faster alternative to traditional secondary listings [24][25]. - The development of RWA is expected to align with economic trends, with potential breakthroughs in cross-border financial products and limited trials for equity assets [25].

Core Points - Nasdaq has introduced new regulations targeting IPOs and listing maintenance conditions, raising the bar for new companies, accelerating delisting for non-compliant firms, and specifically clarifying fundraising requirements for Chinese companies [2][3] Group 1: New Regulations Overview - The new rules include higher listing thresholds, with public float market value for companies meeting "profitability standards" set at a minimum of $15 million [5] - Companies with market values below $5 million will face accelerated delisting if issues arise [5] - Chinese companies must now meet a minimum fundraising requirement of $25 million for IPOs, explicitly defined as "public offering fundraising" [5][6] Group 2: Impact on Chinese Companies - Currently, there are 411 Chinese companies listed in the U.S., with 338 on Nasdaq, representing over 80% [7] - Approximately 36 Chinese companies have market values below $5 million, and around 46 have values between $5 million and $10 million, indicating potential delisting risks for low-value stocks [7] - The new fundraising threshold will significantly increase the barriers for future Chinese IPOs in the U.S., as only three out of 21 Chinese companies that went public this year met the $25 million requirement [7] Group 3: Implications for Hong Kong Stock Exchange - The new Nasdaq regulations may lead to a shift of Chinese companies seeking to list on the Hong Kong Stock Exchange (HKEX) as an alternative [8] - HKEX has been optimizing its listing mechanisms, offering more flexible fundraising requirements compared to Nasdaq [8] - The increasing acceptance of Chinese companies by HKEX investors, along with the opening of the Stock Connect mechanism, enhances the attractiveness of HKEX for Chinese firms [9] Group 4: Challenges and Considerations - The influx of companies to HKEX may lead to concerns over the quality of listings, as some firms may have unstable earnings or unclear business models [9][10] - HKEX must maintain rigorous listing standards to avoid the risk of "sick companies" entering the market, which could harm its reputation [10] - Investors should focus on the fundamentals of newly listed Chinese companies in HKEX, analyzing their revenue structure and profitability prospects to avoid speculative investments [10]

Summary of Hong Kong Stock Exchange (HKEX) Conference Call Industry Overview - The conference call discusses the Hong Kong Stock Exchange (HKEX) and its valuation dynamics influenced by various factors, including historical events like the launch of Stock Connect programs and the return of Chinese concept stocks [2][4]. Key Points and Arguments 1. **Valuation History**: HKEX has experienced three significant valuation increases historically, with valuations typically above 30 times earnings [2][4]. 2. **Profitability Metrics**: HKEX operates on a light asset model, maintaining an EBITDA margin above 70% and a return on equity (ROE) above 20%, with a stable dividend payout ratio around 90% [2][6]. 3. **IPO Reforms**: Recent reforms have attracted new economy companies, with their market capitalization now exceeding 35%, indicating room for further growth [2][6]. 4. **Southbound Fund Dynamics**: The structure of southbound funds has shifted, with insurance and public funds becoming dominant, contributing over 35% to the average daily trading volume [2][7]. 5. **Cost Reduction for Retail Investors**: HKEX has optimized its settlement fee structure to lower trading costs for small retail investors, aiming to increase participation [2][8]. 6. **Market Recovery Factors**: Anticipated recovery factors for the second half of the year include potential easing of thresholds for Chinese concept stock returns, possible reductions in stamp duty, and changes in the tax treatment of Hong Kong Stock Connect dividends [2][9]. Additional Important Insights 1. **Current Valuation Context**: The current price-to-earnings (P/E) ratio of 40 is considered to be at a historical average, with a conservative estimate projecting a net profit of HKD 16.5 billion for 2025, suggesting a target valuation of 42 times earnings, equating to a market cap of approximately HKD 690 billion, indicating a 20% upside potential [3][10]. 2. **Investor Sentiment**: Despite perceptions of high pricing among investors, detailed analysis suggests that HKEX still possesses significant upside potential, warranting a buy rating [11]. This summary encapsulates the essential insights from the HKEX conference call, highlighting the company's financial health, market dynamics, and future outlook.

Core Insights - The report by Futu highlights a robust IPO market in Hong Kong for the first half of 2025, with Hong Kong reclaiming the top position globally in terms of IPO fundraising [1][2] - The report indicates a strong demand for consumer sector IPOs, with significant interest from both institutional and retail investors [2][5] Hong Kong IPO Market - In H1 2025, Futu acted as an underwriter for 19 Hong Kong IPOs, collaborating with notable projects such as Mixue Group and Blooko [1] - The total fundraising amount in the Hong Kong IPO market reached a significant level, with 54.8% of companies achieving over 100 times subscription rates [1][2] - The consumer sector led the IPO market, while healthcare, industrial, and information technology sectors are expected to gain traction in the latter half of the year [1][2] Subscription Trends - The report notes a high subscription sentiment in the Hong Kong IPO market, with 23 companies achieving over 100 times subscription and 5 companies exceeding 1,000 times [2] - The "money-making effect" from new stocks has created a positive feedback loop, with 30 companies seeing a high first-day closing price, a significant increase from 19 in the previous year [2][5] A+H Listings - Seven A-share companies listed in Hong Kong during H1 2025, contributing over HKD 77 billion, which accounted for 72.2% of total fundraising in the Hong Kong market [8] - There are over 50 A-share companies planning to pursue IPOs in Hong Kong, indicating a continuation of the A+H listing trend [8] US IPO Market - The number of Chinese concept stocks listed in the US increased to 40 in H1 2025, up from 25 in the previous year, although total fundraising decreased to USD 880 million [9] - The first-day performance of Chinese concept stocks improved, with only 32.5% of companies falling below their offering price, a decrease from 44% in the previous year [9] Futu's Market Position - Futu has provided IPO services to over 327 companies across various sectors, maintaining a leading position among Hong Kong tech brokers [10] - The platform's subscription amount accounted for over 20% of the market, with 40 companies achieving more than 40% of the market's subscription amount [10]

Core Viewpoint - The article discusses the trend of Chinese concept stocks (Chinext) returning to the Hong Kong market due to increasing regulatory pressures in the U.S. and the potential for Hong Kong to become a global technology capital hub and a strategic point for integrating Chinese assets into the global market [2][5][10]. Summary by Sections Background of U.S.-China Tensions - The U.S. has long had regulatory tensions regarding Chinese companies listed in the U.S., particularly following the signing of the Holding Foreign Companies Accountable Act (HFCAA) in late 2020, which requires foreign companies to undergo audits or face delisting [4][5]. - In early 2025, the U.S. Treasury Secretary indicated the possibility of delisting Chinese stocks, prompting a response from Hong Kong's financial authorities, who are prepared to welcome these companies back [5][6]. Pathways for Chinext to Return - The Hong Kong Stock Exchange (HKEX) has established three main pathways for Chinext to return: 1. Re-listing in Hong Kong after privatization in the U.S. 2. Secondary listing in Hong Kong through instruments like Depositary Receipts (DR). 3. Dual primary listing, allowing companies to be listed on multiple exchanges while meeting all regulatory requirements [6][8]. Impact on Hong Kong Market - The return of Chinext is expected to significantly increase trading volume in the Hong Kong market, as seen during previous return waves in 2018-2021, where companies like Xiaomi and Alibaba contributed to substantial increases in IPO fundraising [8][9]. - The structure of the Hong Kong market is also anticipated to change, with a shift towards technology and new economy sectors, as traditional sectors like finance and real estate see their weight decrease [9][11]. Global Capital Market Dynamics - The return of Chinext is reshaping the global capital market landscape, reflecting a shift in financial power dynamics between the U.S. and China, and indicating a move towards a multi-polar capital market structure [10][12]. - The trend is also contributing to a "de-dollarization" movement, as global capital seeks alternatives to U.S. assets, with Hong Kong emerging as a strategic exit for capital fleeing from U.S. markets [12][13]. Regulatory and Market Environment - Hong Kong's unique regulatory environment and its position as a bridge between mainland China and international markets provide a favorable backdrop for the return of Chinext, enhancing its appeal to both domestic and international investors [14][15].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to experience verifiable growth, leading to a potential revaluation [1] - The current price-to-earnings (PE) ratio is 38 times, with an upward potential of 24% based on a target PE of 42 times, resulting in a reasonable market value of 692 billion HKD [6][7] - The company benefits from its monopoly status and integrated clearing platform, which allows it to earn commissions from Average Daily Turnover (ADT) [6][7] Financial Data and Earnings Forecast - Revenue projections (in million HKD) for the years 2023 to 2027 are as follows: - 2023: 20,516 (11% growth) - 2024: 22,374 (9% growth) - 2025E: 26,978 (21% growth) - 2026E: 29,020 (8% growth) - 2027E: 29,857 (3% growth) [4] - Net profit attributable to shareholders (in million HKD) is forecasted as: - 2023: 11,862 (18% growth) - 2024: 13,050 (10% growth) - 2025E: 16,477 (26% growth) - 2026E: 17,936 (9% growth) - 2027E: 18,775 (5% growth) [4] - Earnings per share (in HKD) are projected to be: - 2023: 9.36 - 2024: 10.29 - 2025E: 13.00 - 2026E: 14.15 - 2027E: 14.81 [4] Valuation Review - The valuation range for the company is estimated between 30 to 70 times PE, with fundamental and liquidity factors being the core drivers [6][19] - The report emphasizes that the company’s growth potential is supported by the increasing market capitalization of new economy sectors, which have risen from 17% in 2018 to 35% in 2025 YTD [6][59] - The report highlights that the ADT is a critical factor influencing the company's profitability, with expectations for ADT to remain robust due to increased connectivity between mainland China and Hong Kong [6][8]

Group 1 - The core viewpoint is that Hong Kong Exchanges and Clearing Limited (HKEX) is expected to report strong earnings growth in Q2 2025, with a projected year-on-year increase of 31% and a quarter-on-quarter increase of 1% [1] - For Q2 2025, total revenue is anticipated to reach HKD 68.7 billion, representing a year-on-year increase of 27% and a flat quarter-on-quarter performance, while the main fee income is expected to be HKD 54.8 billion, up 30% year-on-year [1] - The trading activity in spot and commodity markets remains high, while derivatives trading shows a marginal decline; spot trading ADT is projected to be HKD 2,381 billion, a 96% increase year-on-year [1] Group 2 - The IPO market is expected to remain active, with 27 IPOs completed in Q2 2025, raising HKD 884 billion, which is a significant increase of 932% year-on-year [1] - The investment income is projected to grow by 15% year-on-year to HKD 13.9 billion, driven by a favorable interest rate environment and increased margin requirements in a high volatility market [1] - The long-term growth potential for HKEX is supported by the expected increase in daily trading volume, with a projected CAGR of 14% for the next decade, leading to a profit CAGR of 12% [2] Group 3 - The current valuation of HKEX is at 34x/32x P/E for 2025/2026, with a target price of HKD 465, indicating an 11% upside potential [2]

Investment Rating - The report indicates a positive outlook for the Hong Kong stock market, highlighting significant liquidity improvements and potential for valuation recovery, particularly in the small and mid-cap sectors [1][5][18]. Core Insights - The Hong Kong stock market has seen a notable increase in liquidity, primarily due to the rising proportion of new economy companies and increased participation from southbound funds and retail investors, which now account for approximately 40% of the market [1][3]. - The report anticipates that the Hong Kong Stock Exchange (HKEX) and brokerage sectors will benefit from high market activity and robust earnings support, with IPO financing expected to reach HKD 107 billion in the first half of 2025, a sevenfold increase year-on-year [1][9]. - The potential return of Chinese concept stocks to the Hong Kong market could significantly enhance trading volume and total market capitalization, with estimates suggesting an increase of 17% to 20% [12][18]. Summary by Sections Market Performance - The Hong Kong stock market is expected to remain active in the second half of 2025, with an increase in the number of listings and trading volume, particularly in the fourth quarter [2][9]. - The market's appeal for new economy assets has been bolstered by reforms at the HKEX and geopolitical factors [2][18]. Liquidity Improvement - The improvement in liquidity is attributed to both asset and funding sides, with a notable increase in the proportion of new economy companies enhancing tradability [3][5]. - The report emphasizes that improved liquidity has led to a revaluation of companies, particularly benefiting small and mid-cap stocks [5][18]. Impact of New Economy Companies - New economy companies have significantly influenced the market, with their market capitalization increasing from 27% in 2015 to over 51% by the end of 2024, and their trading volume now exceeding 70% [16][17]. - These companies are expected to drive higher turnover rates and valuations compared to traditional sectors [17]. Future Growth Potential - The report outlines that the future growth of the Hong Kong stock market will be supported by the influx of new assets and the revaluation of existing companies, driven by domestic enterprises seeking overseas financing and foreign companies returning to avoid geopolitical risks [18][19]. - The HKEX is projected to see substantial profit growth, with estimates suggesting a 31% year-on-year increase in Q2 earnings, reaching HKD 15.4 billion for the year [4][22]. Brokerage Sector Outlook - Key Chinese brokerages such as CITIC Securities, Huatai Securities, and Guotai Junan are expected to benefit significantly from the development of the Hong Kong market due to their strong overseas revenue and competitive edge [4][25]. - The overall outlook for the Chinese brokerage industry is positive, with expected profit growth of nearly 20% for the year [28].

Group 1 - The core viewpoint is that Hong Kong's IPO fundraising exceeded 100 billion in the first half of the year, leading the global market, and the hot IPO market is expected to continue until the end of the year [1] - Various high-quality companies are eager to list in Hong Kong, driven by supportive measures for the capital market and economy introduced by China since last September [1] - The successful completion of large IPOs, such as Midea Group and SF Holding, has encouraged many companies to decide to list in Hong Kong [1] Group 2 - Hong Kong provides not only a financing channel for A-share companies to access international capital markets but also opportunities for US-listed Chinese companies to return to Hong Kong, showcasing its unique advantage as a connector between Chinese and foreign capital markets [2] - Investment focus is suggested on new stock themes such as biotechnology, healthcare, technology, and new consumption, indicating a diversification in Hong Kong's IPO market [2] - The strong demand for refinancing from quality listed companies reflects the gradually recovering confidence of investors in Hong Kong's capital market [2]

Investment Rating - The report maintains a "Positive" outlook on the Hong Kong stock market [4] Core Insights - The report highlights the expected return of Chinese concept stocks and the impact of the "A+H model" on maintaining high Average Daily Turnover (ADT) in the Hong Kong market [4] - It notes that as of May 2025, the total market capitalization of the Hong Kong stock market reached HKD 40.93 trillion, reflecting a 5.4% month-over-month increase and a 24% year-over-year increase [4] - The report emphasizes the significant inflow of southbound funds and the recovery of the IPO market, with 10 new IPOs raising HKD 558 million in May 2025 [4] Summary by Sections Chinese Concept Stock Return - Since 2018, 33 Chinese concept stocks have returned to the Hong Kong market, contributing 14% to the total market capitalization and approximately 12% to the ADT [4] - The report identifies 26 potential Chinese concept stocks that could return, estimating an ADT increase of HKD 72 to 96 billion based on their previous performance in the US market [4][5] Market Overview - The report states that the Hong Kong market's ADT has consistently exceeded HKD 2 trillion for four consecutive months, with May 2025's ADT recorded at HKD 2,103 billion, a 23% decrease month-over-month [4][19] - The turnover rate for the Hong Kong market in 2025 year-to-date is 0.59%, compared to 0.37% in 2024 [4] Investment Analysis - The report recommends focusing on the investment value of the Hong Kong Stock Exchange and Hong Kong brokers, as the active secondary market and IPO market directly benefit their business [4] - Specific recommendations include companies like CICC H, GF Securities H, CITIC Securities H, and Guotai Junan H [4]