Investment Rating - The investment rating for the company is "Strong Buy" (maintained) [1][11] Core Views - The report highlights that the Hong Kong Stock Exchange (HKEX) has shown strong performance in the first half of 2025, with total revenue reaching 14.076 billion HKD, a year-on-year increase of 33%, and net profit attributable to shareholders at 8.519 billion HKD, up 39% year-on-year [2][6] - The report emphasizes the recovery of trading sentiment and the potential for performance and valuation recovery, driven by increased trading activity and improved market conditions [4][6] Financial Performance Summary - For the first half of 2025, the trading fees and transaction system usage fees increased by 49%, settlement and clearing fees by 48%, and listing fees by 13% [6] - The average daily trading volume in the cash market reached 240.2 billion HKD, more than double that of the first half of 2024, with the average daily trading volume for the Stock Connect program also showing significant growth [6] - The report projects a strong growth trajectory for the company, with net profit forecasts for 2025, 2026, and 2027 revised to 18.8 billion HKD, 20 billion HKD, and 21.1 billion HKD respectively, reflecting year-on-year growth rates of 44%, 6%, and 5% [6][8]

Summary of Key Points Core Viewpoint - The Hong Kong Stock Exchange reported that during the week of July 21 to July 27, a total of 9 companies submitted applications, 1 company passed the hearing, and 1 new stock was listed. Company Summaries - **GoerTek Inc.**: Submitted an application on July 21, focusing on smart sensing interaction solutions, particularly acoustic sensors. It is the fifth largest global provider in this sector with a market share of 2.2% and the largest in China. Revenue for 2022 to 2024 was approximately RMB 31.21 billion, RMB 30.01 billion, and RMB 45.36 billion respectively, with net profits of RMB 3.26 billion, RMB 2.89 billion, and RMB 3.09 billion [2][2]. - **Guangdong Tianyu Semiconductor Co., Ltd.**: Submitted an application on July 22, specializing in silicon carbide epitaxial wafers. It holds the top position in China's market with a revenue market share of 30.6%. Revenue for 2022 to 2024 was approximately RMB 4.37 billion, RMB 11.71 billion, and RMB 5.2 billion respectively, with net profits of RMB 281.4 million, RMB 95.88 million, and a loss of RMB 500 million [3][3]. - **Daheng Technology (Shenzhen) Co., Ltd.**: Submitted an application on July 22, known for its folding bicycles, holding a market share of 26.3% in volume and 36.5% in revenue in China. Revenue for 2022 to 2024 was approximately RMB 2.54 billion, RMB 3 billion, and RMB 4.51 billion respectively, with net profits of RMB 314.34 million, RMB 34.85 million, and RMB 52.29 million [4][4]. - **Juzhi Technology Development Co., Ltd.**: Submitted an application on July 23, focusing on baby monitoring products. Revenue for 2022 to 2024 was approximately RMB 1.90 billion, RMB 3.48 billion, and RMB 4.62 billion respectively, with net profits of RMB 34.82 million, RMB 63.36 million, and RMB 94.69 million [5][6]. - **Jiangsu Zhonghui Yuantong Biotechnology Co., Ltd.**: Submitted an application on July 24, specializing in vaccines. Revenue for 2023 to 2025 was approximately RMB 52.17 million, RMB 260 million, and RMB 410,000 respectively, with net losses of RMB 425 million, RMB 259 million, and RMB 87.32 million [7][7]. - **Fujian Lemo IoT Technology Co., Ltd.**: Submitted an application on July 25, a leader in smart massage services in mainland China, with a market share of 33.9% to 42.9% from 2022 to 2024. Revenue for 2022 to 2024 was approximately RMB 3.30 billion, RMB 5.87 billion, and RMB 7.98 billion respectively, with net profits of RMB 6.48 million, RMB 87.34 million, and RMB 85.81 million [8][8]. - **Anhui Jinyan High Clay New Materials Co., Ltd.**: Submitted an application on July 25, specializing in kaolin materials with a market share of 19.1%. Revenue for 2022 to 2024 was approximately RMB 1.90 billion, RMB 2.05 billion, and RMB 2.67 billion respectively, with net profits of RMB 24.42 million, RMB 43.61 million, and RMB 52.60 million [9][9]. - **Shandong Shengruan Technology Co., Ltd.**: Submitted an application on July 26, providing digital solutions for energy and manufacturing sectors. Revenue for 2022 to 2024 was approximately RMB 3.91 billion, RMB 5.02 billion, and RMB 5.25 billion respectively, with net profits of RMB 37.60 million, RMB 53.70 million, and RMB 59.30 million [10][10]. - **AIWB Inc.**: Submitted an application on July 25, focusing on smart building solutions in Texas. Revenue for 2022 to 2024 was approximately USD 103 million, USD 121 million, and USD 105 million respectively, with net losses of USD 347,000, USD 620,000, and USD 531,000 [11][11]. Company Hearing and IPO - **Jiangsu Zhonghui Yuantong Biotechnology Co., Ltd.**: Passed the hearing on July 27, focusing on innovative vaccines with two core products. Revenue for 2023 to 2025 was approximately RMB 52.17 million, RMB 260 million, and RMB 410,000 respectively, with net losses of RMB 425 million, RMB 259 million, and RMB 87.32 million [12][12]. - **Vili Zhibo-B (09887.HK)**: Launched an IPO from July 17 to July 22, with a subscription rate of 3494.78 times in the public offering. The stock began trading on July 25 at HKD 67.10, a 91.71% increase [13][14].

Group 1 - Hong Kong's international financial center is thriving, with the Hong Kong Stock Exchange leading global IPO activities, completing 35 IPOs and raising nearly 1000 billion HKD by June 23, 2025 [1] - The number of companies waiting for IPO approval in Hong Kong exceeds 160, with over 40 applications submitted in May alone [1] Group 2 - Chinese securities firms play a crucial role in enhancing Hong Kong's status as an international financial center, becoming significant players in the IPO market and driving fundraising to global prominence [2][3] - The IPO market in Hong Kong has shown a notable recovery, with fundraising exceeding the total for the entire year of 2024, aided by Chinese securities firms' deep local resources and understanding of regulatory frameworks [3] Group 3 - Chinese securities firms are increasingly dominating the IPO market, surpassing foreign institutions in the number of projects, as evidenced by the successful listing of Haitian Flavoring and Food Company, which became the second-largest IPO in Hong Kong this year [4] - The involvement of major international investment banks alongside Chinese firms highlights the growing maturity and competitiveness of Chinese securities firms in the local market [4] Group 4 - Chinese securities firms facilitate cross-border capital flow and deepen the connectivity between mainland and Hong Kong capital markets, with a significant increase in trading volume through the Hong Kong Stock Connect [5] - In 2024, the trading amount serviced by Chinese securities firms for the Hong Kong Stock Connect reached 11.2 trillion HKD, a year-on-year increase of 64.9% [5] Group 5 - Chinese securities firms are expanding their presence in Hong Kong, with 35 subsidiaries established by the end of 2024, reflecting their commitment to the market [6] - The establishment of a wholly-owned subsidiary by Western Securities with an investment of 1 billion RMB underscores the confidence of Chinese firms in maintaining financial stability in Hong Kong [6]

Core Viewpoint - The "ETF Connect" has significantly transformed the capital market landscape in China over the past three years, enhancing trading activity and providing new momentum for market development [1][2]. Summary by Sections Development and Growth of "ETF Connect" - Since its launch on July 4, 2022, the number of "ETF Connect" products has increased from 87 to 265, reflecting a substantial expansion in product offerings [3][4]. - Trading volume has surged, with northbound trading reaching a total of 256.36 billion RMB in the first five months of the year, a 148% increase compared to the same period last year, while southbound trading amounted to 416.34 billion HKD, a 180% increase [3][4]. Impact on Market Integration and Internationalization - "ETF Connect" has played a crucial role in enhancing the integration of domestic and Hong Kong markets, facilitating cross-border investment and promoting the internationalization of the RMB [4][5]. - The mechanism has been recognized as a key component of China's financial opening strategy, providing a more convenient and efficient investment channel compared to traditional methods like QFII and RQFII [7][8]. Advantages of "ETF Connect" - The mechanism allows for easier access to a diverse range of investment products without the complexities of qualification and capital approval processes, thus attracting more international investors [7][8]. - "ETF Connect" has been described as a "passive investment bridge" that not only enhances trading activity but also fosters deeper integration of market rules, valuation systems, and investor structures between mainland China and Hong Kong [8][9]. Future Potential and Innovations - The lowering of entry thresholds for "ETF Connect" is expected to further stimulate product innovation and layout by asset management institutions in both regions [8]. - The inclusion of REITs and support for leading domestic companies to list in Hong Kong are among the measures being implemented to inject new vitality into the capital market [9].

Group 1 - The Hong Kong Stock Exchange (HKEX) celebrated its 25th anniversary, highlighting its role as the heart of Hong Kong's financial industry [1] - The Chief Executive of the Hong Kong Special Administrative Region, John Lee, acknowledged the HKEX's contributions to the prosperity and development of Hong Kong over the past quarter-century [1] - HKEX has strengthened its role as a "super connector" and "super value creator," enhancing the interconnection between mainland and Hong Kong capital markets [1] Group 2 - The Hong Kong government plans to collaborate closely with HKEX and regulatory bodies to enhance market liquidity in response to current global challenges [1]

Core Insights - Hong Kong has risen to third place in the global competitiveness ranking, marking its return to the top three since 2019, with a total score of 99.2, an increase of 7.7 points, the highest growth among the top ten economies [1][4] Group 1: Competitiveness Factors - Hong Kong's "government efficiency" and "business efficiency" have both ranked second globally, while "economic performance" and "infrastructure" have risen to sixth and seventh respectively [4] - In sub-factors, Hong Kong ranks first in "tax policy" and "business regulations," and second in "international investment," "education," and "finance," with "international trade" and "management practices" ranking third [4] Group 2: Economic Outlook - The Hong Kong government projects economic growth between 2% and 3% for the year, reflecting positive evaluations from business leaders regarding the region's competitiveness [7] - The number of registered companies in Hong Kong has reached a new peak, indicating a favorable business environment despite challenges faced by certain sectors like retail and dining [7] Group 3: Financial Market Performance - The "Stock Connect" programs have shown significant growth, with average daily northbound trading volume increasing by 33% year-on-year, and southbound trading volume rising by 191% [10] - This growth highlights international investors' confidence in utilizing Hong Kong as a bridge to invest in mainland markets [10] Group 4: Challenges and Future Directions - Despite the positive ranking, challenges remain, particularly for small and medium-sized enterprises (SMEs) facing operational pressures and the need for transformation [11][12] - The government aims to enhance governance and accountability among senior officials to improve overall governance levels [4][11]

Group 1 - Chinese brokerage stocks collectively rose, with notable increases: Guolian Minsheng up 5.4% to HKD 3.92, Everbright Securities up 4.46% to HKD 8.66, CICC up 3.88% to HKD 16.6, CITIC Securities up 2.86% to HKD 10.08, and Huatai Securities up 2.56% to HKD 15.24 [1] - The recent issuance of the "Opinions on Deepening Reform and Innovation in the Shenzhen Comprehensive Reform Pilot" by the Central Committee and the State Council allows companies in the Guangdong-Hong Kong-Macao Greater Bay Area listed on the Hong Kong Stock Exchange to also list on the Shenzhen Stock Exchange [1] - This policy is expected to enhance the connectivity between the capital markets of mainland China and Hong Kong, increasing trading activity and opening growth opportunities for brokerage investment banking businesses [1] - Current brokerage valuations are at historical lows, and with market recovery and favorable policies, brokerage businesses such as brokerage, investment banking, and capital intermediary services are likely to benefit, leading to further valuation recovery in the brokerage sector [1] Group 2 - The 2025 Lujiazui Forum will be held in Shanghai on June 18-19, where major financial policies are expected to be announced by central financial management departments [2] - It is anticipated that more policies aimed at activating the capital market will be released, focusing on enhancing the quality of listed companies, market activity, and investor returns [2] - The market sentiment is expected to be catalyzed by the policy announcements during the Lujiazui Forum, according to Donghai Securities [2]

Core Viewpoint - The recent document from the Central Committee and the State Council outlines a new round of comprehensive reform pilot in Shenzhen, emphasizing the cultivation of technology talent and the development of artificial intelligence and low-altitude economy industries [1][2]. Group 1: Reform Measures - The document proposes a series of reform measures aimed at breaking down institutional barriers in education and technology talent, enhancing the integration of innovation chains, industry chains, and funding chains, and expanding cooperation avenues in the Guangdong-Hong Kong-Macao Greater Bay Area [2][8]. - It highlights the importance of Shenzhen as a key engine in the construction of the Greater Bay Area and its role in national development [2][7]. Group 2: Economic and Financial Initiatives - The reform plan supports the establishment of private equity and venture capital funds in specific sectors, allowing companies listed on the Hong Kong Stock Exchange to also list on the Shenzhen Stock Exchange [6][14]. - The document emphasizes the need for a higher-level open economic system, promoting the optimization of goods trade and strengthening the innovation of digital RMB application scenarios [8][14]. Group 3: Talent and Education Reforms - The reform emphasizes the integration of education, technology, and talent systems, proposing new models for higher education that align with emerging industries [10][12]. - It aims to cultivate high-quality, interdisciplinary engineering talent through collaboration between universities and enterprises, and to explore new training models for skilled workers [12][13]. Group 4: Innovation and Technology Development - The document outlines specific strategies for fostering artificial intelligence and low-altitude economy sectors, positioning them as strategic emerging industries [10][11]. - It calls for the establishment of new mechanisms for research funding management and the exploration of market-oriented salary systems for new research institutions [11][12]. Group 5: Capital Market Reforms - The policy aims to enhance the interconnectivity of capital markets, allowing for the return of leading technology companies from Hong Kong to the A-share market, which is expected to improve the quality of listed companies on the Shenzhen Stock Exchange [15][16]. - The document indicates that the new policies will facilitate the return of unprofitable tech companies, such as those in artificial intelligence and semiconductors, to the Shenzhen market [16][17].

Group 1 - The issuance of the "Opinions" allows companies in the Guangdong-Hong Kong-Macao Greater Bay Area listed on the Hong Kong Stock Exchange to also list on the Shenzhen Stock Exchange, marking a deepening of the interconnection mechanism of China's capital markets from the "trading end" to the "issuance end" [1][2] - This reform is expected to facilitate domestic financing for red-chip companies and the return of Chinese concept stocks, accumulating "Bay Area experience" for institutional innovation [1][2] - The policy aims to address the challenges of cross-border capital flow and institutional differences, enhancing regional synergy and promoting the dual listing mechanism to meet corporate financing needs [2][3] Group 2 - As of June 11, there are 2,636 H-share listed companies, with 1,589 of them registered in the Greater Bay Area, accounting for over 60% of the total and a market capitalization of approximately 20.72 trillion yuan, which is 32.23% of the total H-share market [3] - The characteristics of H-share companies in the Greater Bay Area include industry diversification, a concentration of well-known enterprises, and a strong demand for flexible financing environments due to international business needs [3][4] - Listing on the Shenzhen Stock Exchange is expected to enrich the industry matrix and types of companies in the Shenzhen market, optimizing the valuation system and enhancing the attractiveness of the A-share market to domestic and foreign investors [3][4]

Group 1 - The Hong Kong Stock Exchange (HKEX) has established strong momentum in connecting with the Middle East market, with the first Saudi Arabian government bond listed on HKEX [2] - The Premia Bank of China Saudi Islamic Government Bond ETF, the first investment-grade Islamic bond ETF in Asia, was officially listed on HKEX on May 29, 2025, providing investors direct access to Saudi government and government agency bonds [2] - The CEO of the Saudi Exchange, Mohammed AlRumaih, stated that the successful issuance of the ETF on HKEX opens investment channels for global investors into the Saudi market, enhancing global asset diversification [2] Group 2 - In February 2023, HKEX signed a memorandum of cooperation with the Saudi Exchange to explore collaboration in multiple areas, including the launch of the largest Saudi ETF in Hong Kong, managing approximately 10 billion HKD in assets [3] - Hong Kong's Financial Secretary, Paul Chan, emphasized that cooperation between Hong Kong and the Middle East extends beyond finance to include infrastructure and professional services, as the Middle East seeks economic diversification [3] - HKEX and the Saudi Exchange are promoting connectivity through capital markets, aiming to uncover opportunities within Saudi Arabia's Vision 2030 and share opportunities arising from China's development [3]