Core Insights - The Hong Kong Stock Exchange will officially launch the Hang Seng Biotechnology Index Futures on November 28, 2025, marking a significant milestone since the introduction of the Hang Seng Biotechnology Index [1] - The Hang Seng Biotechnology Index, launched in December 2019, aims to reflect the overall performance of biotechnology companies listed in Hong Kong that meet the Stock Connect eligibility criteria [1] - The index comprises 30 constituent stocks from four business subcategories: pharmaceuticals, biotechnology, pharmaceutical distribution, and medical devices and supplies [1] Performance Summary - As of December 5, 2025, the biotechnology sector accounts for 50% of the index weight, while pharmaceuticals account for 40% [1] - Over the past 12 months, the Hang Seng Biotechnology Index has increased by 76.8%, outperforming the Hang Seng Composite Index by 40 percentage points [1] - Year-to-date until December 5, the Hang Seng Biotechnology Index has risen by 80.4%, significantly higher than the Hang Seng Composite Index's increase of 33.8% by 46.6 percentage points [1] - The superior performance of the Hang Seng Biotechnology Index is attributed to policy support from mainland China and the growing global standing of Chinese biotechnology companies [1] Market Dynamics - The explosive growth in external licensing transactions (authorizing another entity to produce and/or distribute drugs) reflects the increasing importance of Chinese biotechnology companies, with transaction amounts rising from less than $100 million in 2019 to $52 billion in 2024, representing a compound annual growth rate of 249% [2] - Prior to the launch of the Hang Seng Biotechnology Index Futures, the Hong Kong Stock Exchange had introduced futures contracts based on three flagship indices: the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Technology Index [2] - Historical data indicates that as the product ecosystem around an index matures, trading volumes for its futures contracts tend to become more active [2]

Core Insights - Hong Kong's derivatives market has become a crucial part of the local financial system and a major growth driver in Asia, particularly in offshore RMB and interest rate derivatives [1][2] - The market has seen over a twofold increase in trading volume and open interest over the past decade, indicating significant depth and liquidity [1] - The average daily trading volume of exchange-traded derivatives contracts reached a historical high last year [1] Group 1: Market Growth Drivers - The strong growth is primarily driven by three flagship products: Hang Seng Index futures, Hang Seng China Enterprises Index futures, and Hang Seng Tech Index futures [2] - Demand for individual stock options and offshore RMB futures has further propelled this growth, contributing approximately 90% to the total trading volume since 2015 [2] - The continuous opening of the mainland market has strengthened Hong Kong's role as a "super connector" between domestic and foreign markets [2] Group 2: Regional Market Performance - Asia's share in the global derivatives market has significantly increased from 49% in 2021 to 82% in 2024, with contract trading volume surging 4.5 times to 169.2 billion contracts [2] - Emerging markets like India have contributed to this growth, alongside a rising demand for derivatives as hedging tools [2] Group 3: Innovative Mechanisms - The launch of the Swap Connect mechanism is a milestone, facilitating overseas investors' participation in the onshore RMB interest rate swap market [3] - Since its inception, the Swap Connect has seen a nominal principal transaction total exceeding 8.1 trillion RMB, averaging about 14.5 billion RMB daily, accounting for approximately 10% of the mainland interest rate swap market [3] - The extension of the maximum term for northbound swap contracts from 10 years to 30 years enhances product variety and provides effective tools for managing risks associated with long-term RMB government bonds [3]