Core 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].

Core Viewpoint - CICC has raised its profit forecast for Hong Kong Exchanges and Clearing (HKEX) for 2025 by 3% to HKD 17.1 billion, while maintaining the 2026 forecast largely unchanged. The current trading multiples are at 31x for both 2025 and 2026 P/E, with a target price of HKD 500, indicating an 18% upside potential [1]. Group 1 - The forecast for Q3 2025 indicates a year-on-year profit increase of 49% and a quarter-on-quarter increase of 5% [2]. - CICC expects Q3 revenue to rise by 40% year-on-year and 4% quarter-on-quarter to HKD 75.3 billion, with core fee income projected to increase by 57% year-on-year and 18% quarter-on-quarter to HKD 65.1 billion [2]. - CICC anticipates total revenue and profit for the first three quarters of 2025 to increase by 35% and 42% year-on-year, reaching HKD 216.1 billion and HKD 132.0 billion, respectively [2]. Group 2 - Trading activity remains robust, with Q3 average daily turnover (ADT) expected to rise by 141% year-on-year and 20% quarter-on-quarter to HKD 286.4 billion [2]. - Southbound ADT is projected to increase by 285% year-on-year and 36% quarter-on-quarter to HKD 152.5 billion, accounting for 26.6% of Hong Kong stocks [2]. - The number of IPOs in Q3 is expected to reach 25, raising HKD 73.5 billion, which is a 74% year-on-year increase but a 19% quarter-on-quarter decrease [2]. Group 3 - Investment income is expected to decline by 18% year-on-year and 36% quarter-on-quarter to HKD 9.9 billion in Q3 2025 [3]. - The narrowing of margin interest spreads is anticipated due to a decline in long-term yields and a rise in short-term borrowing costs, which may negatively impact investment income [3]. - Market volatility is expected to decrease, leading to a reduction in margin requirements for derivatives trading, further affecting investment income performance [3]. Group 4 - The fundamental outlook for HKEX remains strong, with high trading activity supported by a favorable liquidity environment for foreign capital [4]. - The average daily turnover for Hong Kong stocks reached HKD 288 billion in October, indicating sustained high trading activity [4]. - CICC suggests that the anticipated easing of monetary policy by the Federal Reserve could support liquidity in the Hong Kong market, presenting potential investment opportunities [4].

Core Viewpoint - Hong Kong's stock market is undergoing reforms to attract emerging industries and overseas companies for fundraising, with a focus on optimizing the listing mechanism while ensuring investor protection [2][4]. Group 1: Listing Mechanism Optimization - The Hong Kong Stock Exchange (HKEX) has relaxed listing rules by lowering the market capitalization requirement for secondary listings of Greater China issuers and removing restrictions on "innovative industry companies" [4]. - HKEX is set to lower the listing market cap threshold for specialized technology companies by September 2024 and will launch a "Tech Company Fast Track" by May 2025 to provide pre-listing guidance for biotech and other firms [4]. - The HKEX is researching a tiered minimum public shareholding requirement based on issuer market capitalization, with consultations already initiated [4]. Group 2: Approval Process Efficiency - The approval process for listings has been significantly expedited, with the average time reduced from 61 days in 2022 to 28 days as of June 2023 [5]. - The Securities and Futures Commission (SFC) and HKEX have committed to completing applications within 40 business days, with a maximum of two rounds of inquiries [5]. Group 3: International Outreach and Market Expansion - The proportion of international companies listed in Hong Kong is currently between 5% and 10%, which is significantly lower than London and the US markets [7]. - HKEX plans to expand the list of recognized overseas exchanges and simplify the listing process for foreign issuers, aiming to enhance the attractiveness of Hong Kong as a fundraising platform [7][8]. - The HKEX is actively promoting its listing advantages in ASEAN and the Middle East, with initiatives to attract more international companies to utilize Hong Kong's capital market [8].

Core Viewpoint - The establishment of the "Shenwan Hongyuan Listing Service Station" aims to provide comprehensive support for technology innovation enterprises in Xuhui District to facilitate their listing processes and enhance their development in the capital market [5]. Group 1: Listing Service Station - Shenwan Hongyuan Securities has set up a listing service station at the Moso Space Financing Service Center to offer integrated services combining research, investment, and investment banking for local tech enterprises [5]. - The service station will provide precise and convenient full-process listing services to support high-quality development of technology innovation companies in Xuhui District [5]. Group 2: Training Activities - A training event for Xuhui enterprises regarding listing in Hong Kong was held, featuring insights from the Hong Kong Stock Exchange on IPO policies, which received positive feedback from participating companies [5]. - The event is part of Shenwan Hongyuan's strategy to align with national technology innovation initiatives and support the development of Shanghai and Hong Kong as international financial centers [5].