Core Viewpoint - Hong Kong Stock Exchange reported strong financial performance for 2025, with revenue and net profit showing significant year-on-year growth, driven by increased trading activity and listing fees. Financial Performance - In 2025, the company achieved revenue and other income of HKD 29.161 billion, a year-on-year increase of 30.3% [1] - The net profit attributable to shareholders reached HKD 17.754 billion, reflecting a year-on-year growth of 36.0% [1] Revenue Breakdown - Revenue from trading and trading system usage fees increased by 43.73%, while listing fees rose by 20.55% [1] - Settlement and clearing fees grew by 49.29%, and custody and agency service fees increased by 31.15% [1] - Market data fees and investment income saw smaller increases of 7.83% and 3.73%, respectively [1] - The growth in trading and settlement fees was attributed to heightened trading activity in the cash, derivatives, and commodities segments [1] Trading Activity - The average daily turnover of stock securities on the exchange increased by 92.9% year-on-year [2] - The average daily turnover for Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect rose by 41.5% and 151.2%, respectively [1] - Derivatives trading fees grew by 10.3%, driven by increased activity in stock options and warrants [1] - The average daily trading volume of LME metal contracts increased by 7.7%, contributing to a 10.6% rise in commodity trading fees [1] Listing Fees - Listing fees from the cash market increased by 8.6%, with 119 new companies listed, raising funds that grew by 236.1% year-on-year [2] - Derivatives market listing fees rose by 38.4% to HKD 825 million, primarily due to a significant increase in new derivative warrants and structured products [2] Investment Income - In Q4 2025, the company reported net investment income of HKD 1.218 billion, reflecting a quarter-on-quarter increase of 2% and a year-on-year increase of 20% [2] - The average investment amount increased by 20.08% year-on-year, while the annualized investment return rate decreased slightly to 1.32% [2] - The company's total investment income reached HKD 1.870 billion, a year-on-year increase of 6.98% [2] Future Outlook - The liquidity in the Hong Kong stock market is expected to continue rising due to a series of connectivity policies, which may enhance overall market activity and valuations [3] - Projections for 2026-2028 indicate revenues of HKD 32.614 billion, HKD 34.403 billion, and HKD 36.326 billion, with net profits of HKD 20.353 billion, HKD 21.424 billion, and HKD 22.593 billion, respectively [3] - Corresponding PE valuations are expected to be 25.88, 24.58, and 23.31 times [3]

Core Viewpoint - The Hong Kong stock market showed strong performance in May, with active trading and positive growth expectations for the Hong Kong Stock Exchange's (HKEX) earnings [1][2] Market Performance - The Hang Seng Index and Hang Seng Tech Index increased by 16.1% and 15.7% respectively compared to the end of 2024 [1] - The monthly average daily turnover (ADT) for HKEX was HKD 210.3 billion, down 23.4% month-on-month but up 50.4% year-on-year [1] - The monthly ADT for the Shanghai-Shenzhen Stock Connect was HKD 906.13 billion, down 6.9% month-on-month but up 22.4% year-on-year [1] - The monthly ADT for the Hong Kong Stock Connect was HKD 147.42 billion, down 22.9% month-on-month but up 50.1% year-on-year [1] Derivatives and Commodity Markets - In the derivatives market, both futures and options trading volumes decreased month-on-month and year-on-year [1] - The average daily volume (ADV) for futures was 586,000 contracts, down 30.3% month-on-month and 14.6% year-on-year [1] - The ADV for options was 805,000 contracts, down 19.8% month-on-month and 23.7% year-on-year [1] - The London Metal Exchange (LME) saw a decrease in trading volume, with a daily average of 707,000 contracts, down 19.7% month-on-month and 8.5% year-on-year [1] IPO Market - The Hong Kong IPO market experienced significant growth, with 10 new listings in May totaling HKD 55.8 billion, representing increases of 1830.4% month-on-month and 3150.6% year-on-year [1] Investment Income - Investment income rates for HKEX showed a decline month-on-month and year-on-year as of the end of May [1] - The 6-month HIBOR was 2.16%, down 1.86 percentage points month-on-month and down 2.66 percentage points year-on-year [1] - The 1-month HIBOR was 0.59%, down 3.37 percentage points month-on-month and down 3.89 percentage points year-on-year [1] - The overnight HIBOR was 0.03%, down 4.47 percentage points month-on-month and down 4.44 percentage points year-on-year [1] - The US overnight bank funding rate was 4.33%, unchanged month-on-month [1] Macroeconomic Environment - Domestic economic conditions showed signs of recovery, with the manufacturing PMI at 49.50%, up 0.50 percentage points month-on-month [1] - New orders and new export orders indices were at 49.8% and 47.5%, respectively, with increases of 0.60 percentage points and 2.80 percentage points month-on-month [1] - The manufacturing production index was at 50.7%, up 0.90 percentage points month-on-month [1] - Internationally, the Federal Reserve maintained its interest rate at 4.25%-4.50%, with expectations for rate cuts being postponed [1][2] Investment Outlook - As of the end of May, the company's PE ratio was 35.45x, positioned at the 44th percentile historically since 2016, indicating potential value for investment [2] - The company is expected to achieve revenues of HKD 29.8 billion, HKD 31.0 billion, and HKD 32.5 billion for 2025-2027, with net profits of HKD 17.9 billion, HKD 18.6 billion, and HKD 19.6 billion respectively [2] - Corresponding PE valuations are projected to be 29.2x, 28.0x, and 26.6x for the same period, suggesting a "buy" rating [2]