Core Insights - The Hong Kong IPO market has experienced a strong recovery since 2025, with fundraising exceeding HKD 200 billion, regaining the top position globally [1] - UBS has played a significant role in this resurgence, leading notable projects such as the listings of Mixue Ice Cream and CATL, and participating in BYD's placement [1] Market Performance - The performance of the Hong Kong IPO market this year has exceeded initial expectations, with a notable increase in high-quality foreign investments following the "924 policy" last year [2] - UBS coordinated a significant placement for BYD, raising approximately HKD 435 billion (around USD 56 billion), primarily from foreign investors, which boosted market confidence [2] Representative Projects - Key projects like Mixue Ice Cream have marked the opening of the IPO market this year, achieving record frozen capital and demonstrating strong demand from institutional investors [3] - CATL's successful listing with a "0 discount" pricing strategy further illustrates the positive trend of domestic and foreign capital participation in the market [3] Impact of HKEX Reforms - Recent reforms by the Hong Kong Stock Exchange (HKEX) have positively influenced the market, allowing larger companies to issue shares at more reasonable proportions, encouraging high-quality issuers to list [4] - The new regulations have stabilized the retail investor allocation at around 10%, aligning with international practices and enhancing institutional pricing power [5] Foreign Capital Trends - There is a clear trend of foreign capital returning to the Hong Kong IPO market, particularly from Europe and the Middle East, with increased participation from long-term foreign cornerstone investors [6] - The shift in foreign investment is driven by a need for diversified asset allocation, with China becoming a key focus for global investors [7] Future Outlook - The outlook for the Hong Kong IPO market remains positive, supported by a cycle where good supply creates good demand, with many high-growth companies planning to list [8] - Three key trends defining the future of the Hong Kong IPO market are "diversification," "supply-demand linkage," and "globalization," indicating a multi-faceted growth trajectory [9]

Core Viewpoint - The company shows significant revenue growth driven by trading and settlement fees, with a positive outlook for future performance and valuation improvement [1][2][3][4] Group 1: Financial Performance - For the first three quarters of 2025, the company's revenue and profit attributable to shareholders reached HKD 218.5 billion and HKD 134.2 billion, respectively, representing year-on-year increases of 37% and 45% [1] - In Q3 alone, the revenue and profit were HKD 78 billion and HKD 49 billion, showing year-on-year growth of 45% and 56%, and quarter-on-quarter growth of 8% and 10% [1] - The trading, settlement, listing, custody, data, and other net investment income saw year-on-year increases of 57%, 66%, 16%, 25%, 8%, 10%, and 4%, respectively [1] Group 2: Market Dynamics - The trading fees and system usage fees for the first three quarters of 2025 amounted to HKD 78 billion, up 57% year-on-year, with spot, derivatives, and commodity trading contributing HKD 47 billion, HKD 20 billion, and HKD 11 billion, respectively [2] - The settlement and clearing fees reached HKD 53 billion, reflecting a 66% year-on-year increase, driven by record trading volumes in the Hong Kong spot market [2] - The number of new listings in the Hong Kong market increased to 69, a 53% year-on-year rise, with total fundraising amounting to HKD 1,883 billion, more than three times that of the same period in 2024 [3] Group 3: Investment Returns and Valuation - The net investment income for the first three quarters of 2025 was HKD 38.9 billion, a 4% year-on-year increase, although the investment yield decreased due to lower returns from external investment portfolios [4] - The expected dividend yield for 2025 is 3.0%, assuming a constant payout ratio of 90%, with potential benefits from foreign capital inflow due to anticipated interest rate cuts by the Federal Reserve [4] - The current price-to-earnings ratio (PE) is 31.2 times, positioned at the 22nd percentile over the past decade, indicating potential for valuation improvement [4]

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited is "Buy" (maintained) [1] Core Views - The report highlights a significant improvement in ADT-related businesses, indicating potential for valuation uplift. The company's revenue and net profit for the first three quarters of 2025 reached HKD 218.5 billion and HKD 134.2 billion, respectively, representing year-on-year increases of 37% and 45% [5][6] - The report anticipates continued high growth in the company's fundamentals, driven by a recovery in IPO activities and sustained inflows of southbound capital, with a forecasted increase in ADT for 2025-2027 [5][6] Summary by Sections Financial Performance - For Q1-Q3 2025, trading, settlement, listing, custody, data, and other investment income grew by 57%, 66%, 16%, 25%, 8%, 10%, and 4% year-on-year, respectively. The core driver of revenue growth is the significant increase in trading and settlement fees directly linked to ADT [5][6] - The company has revised its ADT assumptions for 2025-2027 to HKD 2,580 billion, HKD 2,620 billion, and HKD 2,700 billion, reflecting year-on-year growth of 96%, 2%, and 3% [5][6] Market Outlook - The primary market for Hong Kong stocks is experiencing high demand, with 69 new listings in Q1-Q3 2025, a 53% increase year-on-year, and total fundraising amounting to HKD 1,883 billion, more than three times that of the same period in 2024 [7] - The report notes that the trading volume is expected to remain active due to the influx of quality assets from Chinese concept stocks returning to Hong Kong and the wave of A-share listings in Hong Kong [7] Valuation and Dividend - The expected dividend yield for 2025 is 3.0%, assuming a constant payout ratio of 90%. The report suggests that a potential interest rate cut by the Federal Reserve could drive foreign capital back into the Hong Kong market, benefiting the exchange [8] - The current PE ratio is 31.2, which is at the 22nd percentile of the past ten years, indicating room for valuation improvement [8]

Group 1 - The Hong Kong stock market showed strong performance on November 6, with the Hang Seng Technology Index rising over 2% in the afternoon, driven by gains in tech stocks, non-ferrous metals, and semiconductor sectors [1] - Southbound capital continued to actively invest in the Hong Kong market, with a net purchase amount of 10.373 billion HKD on November 5, bringing the total for the month to 25.677 billion HKD, and a cumulative net purchase of 1,285.694 billion HKD for the year [1] - According to Guotai Junan's recent report, under a neutral assumption, active public funds are expected to see an inflow of 200 billion HKD next year, with passive public funds also expected to bring in 200 billion HKD, and insurance and private equity funds projected to contribute 400 billion HKD and 300 billion HKD respectively [1] Group 2 - China Merchants Securities forecasts that by the end of 2026, there will be an additional 1.54 trillion HKD of long-term southbound capital, potentially bringing a total of approximately 11 trillion HKD in the next five years [2] - The Hang Seng Technology Index ETF (513180) is currently valued at a P/E ratio of 22.52, which is in the historical low valuation range, being below 73% of its historical valuation periods [2] - The technology sector in Hong Kong is expected to benefit from current trends in AI, with potential foreign capital inflows exceeding expectations due to the backdrop of Federal Reserve interest rate cuts and continued accumulation of southbound funds [2]

Core Viewpoint - The recovery of prices is crucial for economic growth and the capital market, supported by favorable conditions in consumption demand, monetary liquidity, and exchange rates [1] Group 1: Consumption Demand - Long-term demographic, industrial, and fiscal transformations are expected to enhance residents' income [1] - The simultaneous movement of the population peak and consumption peak over the next decade suggests a more optimistic total consumption outlook [1] Group 2: Monetary Liquidity - The central bank's initiation of government bond trading and the fiscal policy of "debt conversion" are facilitating the transfer of fiscal deposits to residents and enterprises [1] - The significant rebound in M1 growth over the past year is anticipated to drive a rebound in PPI [1] Group 3: Exchange Rates - The RMB is likely to enter a new appreciation cycle, benefiting from a solid export base, the return of foreign capital to RMB financial assets, and early signs of a long-term weakening of the US dollar [1]

Core Insights - Recent data indicates a significant increase in international capital confidence towards the Chinese market, as evidenced by the emergence of new foreign investors in A-share companies [1] - The return of foreign capital is seen as a logical outcome of valuation recovery, industrial upgrading, and global asset rebalancing, suggesting a long-term growth potential for A-shares and Hong Kong stocks [1] New Foreign Investors - Traut Consulting has entered the top ten shareholders of Yara International with a holding of 852.85 thousand shares, representing 1.05% of the circulating shares, marking its first appearance in A-share companies [2] - The Brunei Investment Agency has also emerged as the ninth largest shareholder of China International Capital Corporation with a holding of 1,031.83 thousand shares, valued at approximately 381 million yuan, indicating its first entry into the top ten shareholders of an A-share company [2] Returning Foreign Players - The return of previously active foreign institutions is noted, such as the Korea Bank, which holds 182.13 thousand shares of Hezhong Intelligent, valued at 35.79 million yuan, marking its return after more than a year [3] - Other institutions like KB Asset and Jane Street Group have also reappeared in the top ten shareholders of A-share companies after extended absences, indicating a renewed interest in the market [3] Increased Attention on Chinese Market - The influx of new foreign investors and the return of established players reflect a growing interest in the Chinese market [4] - HSBC reported a significant increase in foreign investors' exposure to the Chinese A-share market, marking the third consecutive month of net growth in foreign investment [4] - The International Institute of Finance noted that foreign investors injected nearly 45 billion dollars into emerging market stocks and bonds in August, with a substantial portion directed towards the Chinese market [4] Positive Market Outlook - Goldman Sachs anticipates a sustained upward trend in the Chinese stock market, projecting a 30% increase in major indices by the end of 2027 [5] - JPMorgan also expresses optimism regarding the performance of the CSI 300 index over the next year, highlighting that leading companies in healthcare, finance, and entertainment sectors are currently valued reasonably compared to their historical medians [5]

Core Insights - Recent data indicates a significant increase in international capital confidence towards the Chinese market, with new foreign investors appearing in A-share companies' top shareholder lists [1][3][9] - The return of foreign capital is seen as a logical outcome of valuation recovery, industrial upgrades, and global asset rebalancing, suggesting a long-term growth potential for A-shares and Hong Kong stocks [1][9] Group 1: New Foreign Investors - Traut Consulting has entered the top ten shareholders of Yara International with a holding of 8.5285 million shares, representing 1.05% of the circulating shares, marking its first appearance in A-share companies [3] - Brunei Investment Agency has also emerged as a new foreign investor, holding 10.3183 million shares in China International Capital Corporation, valued at approximately 38.1 million yuan, also its first appearance in A-share companies [4] Group 2: Returning Foreign Players - Korean Bank has reappeared in the top ten shareholders of Hezhong Intelligent, holding 1.8213 million shares valued at 3.57885 million yuan, marking its return after more than a year [6] - Jane Street, a quantitative trading firm, has returned to the top ten shareholders of several A-share companies after a two-year absence, indicating renewed interest in the Chinese market [7][9] Group 3: Factors Driving Foreign Capital Return - The increase in foreign investment is attributed to three key factors: clarity in policy bottom, attractive valuations, and a strategic global capital rebalancing from dollar assets to non-U.S. assets [10] - HSBC reported a significant increase in foreign investors' exposure to the Chinese A-share market, with net growth for three consecutive months, indicating a shift in investor sentiment [9][10] Group 4: Market Outlook - Goldman Sachs predicts a sustainable upward trend in the Chinese stock market, expecting major indices to rise by approximately 30% by the end of 2027, driven by factors such as AI's impact on profitability and corporate competitiveness [11] - JPMorgan also expresses optimism for the CSI 300 index, noting that leading companies in healthcare, finance, and entertainment sectors are currently valued reasonably compared to historical medians, suggesting potential for future valuation increases [11]

Core Insights - The investment landscape is experiencing a revival, with fundraising, investment, and exit activities accelerating simultaneously [1][6][10] Group 1: Market Dynamics - The Hong Kong Stock Exchange (HKEX) has seen a significant increase in IPO activity, with total IPO financing reaching HKD 182.9 billion by the end of September, more than doubling compared to the same period in 2024 [4] - The sentiment among international investors towards Chinese assets has shifted from "cannot invest" to "cannot afford not to invest," indicating a fundamental change in perception [2][5] - The "A+H" model has become a cornerstone of the market, with nearly half of the IPO financing in the first nine months coming from this approach [5] Group 2: Investment Trends - There is a noticeable increase in long-term capital from overseas investors, particularly from Europe, the Middle East, and emerging markets, which are becoming key players in the Hong Kong IPO market [5][7] - The demand for investment in China is being driven by a renewed interest in the country's technological innovation capabilities, as evidenced by the active participation of foreign LPs [7][9] Group 3: Future Outlook - The market is witnessing a resurgence in hiring, with many funds restarting recruitment for key positions that had been frozen for three years, indicating a positive outlook for the investment landscape [9] - The current environment is characterized by a combination of institutional benefits and high-quality assets, suggesting the beginning of a new investment cycle [10]

Core Insights - The investment landscape is experiencing a revival, with increased fundraising, investment, and exit activities in the venture capital sector [2][3][10] - There is a significant shift in international capital's perception of Chinese assets, moving from "cannot invest" to "cannot miss investing" [3][8] IPO Activity - The Hong Kong IPO market is witnessing a surge, with total IPO financing reaching HKD 182.9 billion by the end of September, more than doubling compared to the same period in 2024 [7] - The number of public listing applications being processed is close to 300, indicating a robust market environment [7][8] Exit Opportunities - The current year is being referred to as a "year of exits," with many projects being encouraged to initiate the IPO process, revitalizing the investment chain [5][6] - Improved exit expectations are allowing funds to communicate more confidently with Limited Partners (LPs) and restructure valuation systems for late-stage projects [6] Foreign Investment Trends - There is a noticeable increase in enthusiasm from overseas investors, particularly from Europe, the Middle East, and emerging markets, who are becoming foundational investors in Hong Kong IPOs [8][11] - Middle Eastern sovereign wealth funds are actively engaging with the Chinese market, exemplified by a USD 300 million equity investment fund focused on AI, new energy, and semiconductor sectors [12] Talent Market Changes - The talent market is also responding to the renewed investment activity, with several funds restarting key recruitment after a three-year freeze [13] - There is a growing demand for investment professionals to support Chinese companies' international expansion [13] Market Sentiment - The overall market sentiment is shifting positively, with increased trading activity and a clear opening of exit windows [10][15] - The current phase is characterized by a new cycle driven by institutional benefits and high-quality assets, marking a fundamental change in foreign LPs' attitudes towards Chinese assets [15]

Core Insights - Hong Kong's IPO financing amount ranks first globally this year, driven by recent listing policy reforms that have revitalized the capital market and attracted numerous high-quality companies, particularly in the technology sector [1] - Nearly half of the companies that have submitted listing applications are from the technology sector, indicating a significant shift towards tech-focused listings [1] - International investors are increasingly active in the Hong Kong IPO market, with a notable rise in participation from overseas investors, particularly from Europe, the Middle East, and emerging markets, reflecting strong confidence in China's technological innovation [1] - The performance of "A+H" listed companies has been outstanding, accounting for nearly half of the total IPO financing in the first nine months, showcasing the strong momentum of the interconnectedness between the mainland and Hong Kong markets [1]