Core Insights - The biotechnology sector remains one of the most focused themes in the global investment market, with strong growth momentum reflected in the performance of related stocks and the overall sector [1] - The Hang Seng Biotechnology Index, launched in 2019, tracks 30 of the largest biotechnology companies listed in Hong Kong and has seen a significant increase of 64.5% in 2025, with an additional rise of 10.7% year-to-date as of February 24, 2026 [1] Group 1: Market Performance - The Hang Seng Biotechnology Index has a weight distribution of approximately 50% for biotechnology companies and 40% for pharmaceutical companies, with additional representation from drug distribution (6%) and medical devices (4%) [1] - The number of biotechnology and healthcare companies listed in Hong Kong has exceeded 270, with a total market capitalization of over HKD 4.2 trillion, showing substantial growth since the end of 2018 [2] Group 2: Investment Tools - The Hong Kong Stock Exchange offers a diverse range of investment and risk management tools in the biotechnology sector, including stocks, ETFs, structured products, and derivatives [2] - As of the end of February 2026, there are 10 ETFs tracking the Hang Seng Biotechnology Index, with a total asset management scale of HKD 15.6 billion, and the number of structured products linked to biotechnology stocks has increased from 132 in January 2025 to 500 in January 2026 [2] Group 3: Derivative Instruments - The introduction of the Hang Seng Biotechnology Index futures in November 2025 provides investors with more options for participation and risk management in the biotechnology sector [3] - Each futures contract has a contract multiplier of HKD 50 per index point, meaning a 100-point change in the index results in a contract value change of HKD 5,000 [3] Group 4: Volatility and Risk Management - The annualized volatility of the Hang Seng Biotechnology Index was approximately 41.2% for the 12 months ending January 2026, significantly higher than the Hang Seng Index (24.2%) and the Hang Seng China Enterprises Index (25.9%) [4] - Investors can use the Hang Seng Biotechnology Index futures in conjunction with biotechnology ETFs or stocks to manage overall sector risk, allowing for hedging while maintaining long-term positions [4]

Core Viewpoint - Hong Kong Stock Exchange (HKEX) reported its 2025 financial results, which met expectations, showing significant growth in revenue and net profit compared to the previous year [1] Revenue Breakdown - Total revenue for HKEX in 2025 reached HKD 29.16 billion, a year-on-year increase of 30% - Main revenue was HKD 27.11 billion, up 32% year-on-year, excluding investment income and charitable donations - Net profit for 2025 was HKD 17.75 billion, reflecting a 36% year-on-year increase - In Q4 2025, main revenue was HKD 6.67 billion, up 11% year-on-year but down 11% quarter-on-quarter; net profit was HKD 4.34 billion, up 15% year-on-year but down 12% quarter-on-quarter [1][2] Revenue by Fee Type - Revenue by fee type for 2025 was as follows: - Trading fees: HKD 10.33 billion (38%) - Clearing and settlement fees: HKD 7.04 billion (26%) - Investment income: HKD 5.11 billion (19%) - Listing fees: HKD 1.79 billion (7%) - Custody and agency services fees: HKD 1.50 billion (6%) - Market data fees: HKD 1.17 billion (4%) - Year-on-year growth rates for various fees included: - Trading fees: +44% - Clearing and settlement fees: +49% - Listing fees: +21% - Custody and agency services fees: +31% - Market data fees: +8% - Investment income: +4% [2] Market Activity - Average Daily Turnover (ADT) for Hong Kong stocks in 2025 was HKD 249.8 billion, a 90% year-on-year increase - Q4 2025 ADT was HKD 229.8 billion, up 23% year-on-year but down 20% quarter-on-quarter - Southbound ADT for 2025 was HKD 121.1 billion, up 151% year-on-year, contributing 24.2% to total ADT - Northbound ADT for 2025 was RMB 212.4 billion, up 42% year-on-year [3] IPO Market - HKEX maintained its position as the global leader in IPO fundraising, with 119 new listings in 2025 and total IPO proceeds of HKD 286.9 billion, a 226% year-on-year increase - Over two-thirds of IPO proceeds came from new economy companies - As of January 26, 2026, there were over 400 IPO applications in process, including more than 50 applications under specific listing rules [3] Investment Income - Investment income for HKEX in 2025 was HKD 5.11 billion, a 4% year-on-year increase - Q4 2025 investment income was HKD 1.22 billion, up 2% year-on-year and quarter-on-quarter - The contribution of investment income to net profit was 28% [3] Profit Forecast and Rating - The company has adjusted its profit forecasts downward for 2026 and 2027, while introducing a forecast for 2028 - Expected net profits for 2026, 2027, and 2028 are HKD 17.59 billion, HKD 18.36 billion, and HKD 19.51 billion, respectively - The current PE ratio for 2026 is projected at 29.7x, close to historical lows, indicating potential investment value [3]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance relative to the market [6][4]. Core Insights - The company reported a total revenue of HKD 29.16 billion for 2025, reflecting a year-on-year growth of 30%. The main revenue component was HKD 27.11 billion, with a net profit of HKD 17.75 billion, marking a 36% increase year-on-year [4][6]. - The report highlights a significant increase in fee-related income, with various fee categories showing double-digit growth. Trading fees grew by 44%, and settlement and clearing fees increased by 49% [6][4]. - The report notes a decline in margin investment yields, with the weighted yield for margin financing at 1.31%, down from 1.51% in 2024 [6][4]. Financial Data and Earnings Forecast - The financial projections for the company are as follows: - Revenue for 2026 is estimated at HKD 28.32 billion, a decrease of 3% from 2025, with a net profit forecast of HKD 17.59 billion, a slight decline of 1% [5][7]. - The earnings per share (EPS) for 2026 is projected to be HKD 13.9, with a return on equity (ROE) of 29.8% [5][7]. - The report provides a detailed breakdown of revenue sources, with trading fees contributing 38%, settlement and clearing fees 26%, and investment income 19% [6][7]. Market Position and Trends - The Hong Kong stock market maintained its position as the global leader in IPO fundraising, with 119 new listings in 2025, raising HKD 286.9 billion, a 226% increase year-on-year [6][4]. - The report emphasizes the strong performance of the company's derivatives segment, with an average daily volume (ADV) of 166,000 contracts, a 7% increase year-on-year [6][4]. - The report also notes that the company is well-positioned to benefit from the ongoing deepening of connectivity between Hong Kong and mainland China, which is expected to enhance its market value [6][4].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company reported a total revenue of HKD 29.16 billion for 2025, representing a year-on-year increase of 30%. The main revenue reached HKD 27.11 billion, up 32% year-on-year, while net profit was HKD 17.75 billion, reflecting a 36% increase year-on-year [4] - The report highlights significant growth in fee-related income, with various fee categories showing double-digit growth. Trading fees increased by 44%, settlement and clearing fees by 49%, and listing fees by 21% [6] - The Hong Kong stock market maintained its position as the global leader in IPO fundraising, with 119 new listings in 2025 and total IPO proceeds reaching HKD 286.9 billion, a 226% year-on-year increase [6] Financial Data and Earnings Forecast - The company’s projected financials for 2026E show a revenue of HKD 28.32 billion, a slight decrease of 3% year-on-year, with a net profit forecast of HKD 17.59 billion, down 1% year-on-year. The earnings per share (EPS) is expected to be HKD 13.9 [5][7] - The report provides a detailed breakdown of revenue sources for 2025, with trading fees contributing HKD 10.33 billion (38%), settlement and clearing fees HKD 7.04 billion (26%), and investment income HKD 5.11 billion (19%) [6][7] - The report anticipates a return on equity (ROE) of 29.8% for 2026E, with a price-to-earnings (PE) ratio of 29.7x, indicating that the stock is trading near historical lows [5][6]

Market Overview - As of January 2026, the total market capitalization of the Hong Kong securities market reached HKD 50.8 trillion, a 44% increase from HKD 35.4 trillion in the same period last year [1] - In January 2026, the Hong Kong Stock Exchange welcomed 13 new listings, a 63% increase compared to 8 new listings in January 2025 [1] - The total fundraising amount in January 2026 was HKD 531 billion, up 318% from HKD 127 billion in January 2025 [1] Trading Activity - The average daily trading amount in January 2026 was HKD 2,723 billion, an 89% increase from HKD 1,438 billion in January 2025 [1] - The average daily trading amount for derivative warrants was HKD 78 billion, a 77% increase from HKD 44 billion in January 2025 [1] - The average daily trading amount for bull and bear certificates was HKD 142 billion, a 100% increase from HKD 71 billion in January 2025 [1] - The average daily trading amount for exchange-traded funds was HKD 359 billion, a 69% increase from HKD 212 billion in January 2025 [1] - The average daily trading amount for leveraged and inverse products was HKD 31 billion, a 19% increase from HKD 26 billion in January 2025 [1] Derivatives Market - The average daily trading volume for futures and options in January 2026 was 1,706,438 contracts, an 18% increase from 1,452,108 contracts in January 2025 [2] - The average daily trading volume for stock options was 900,960 contracts, a 19% increase from 759,565 contracts in January 2025 [2] Historical Records - On January 29, 2026, the trading volume of the Hang Seng Tech Index options reached a historical high of 39,229 contracts [3] - On January 28, 2026, the trading volume of the Hang Seng Biotech Index futures reached a historical high of 1,013 contracts [4]

Core Insights - The Hong Kong financial market demonstrated significant activity in 2025, setting multiple trading records in both the primary and secondary markets, reinforcing its status as a leading international financial center in Asia [1] Group 1: Market Performance - The average daily turnover in the cash market reached a record high of HKD 249.8 billion, representing a year-on-year increase of 89.5% [2] - Hong Kong regained its position as the world's top IPO market in 2025, with 119 new listings raising a total of HKD 285.8 billion, including three companies that ranked among the top ten global IPOs of the year [4] - The derivatives market also saw a record average daily trading volume of 1.66 million contracts, an increase of 7% year-on-year [5] Group 2: Product Innovations and Growth - Stock options became one of the most actively traded products, with an average daily trading volume rising by 22% to 879,831 contracts [8] - The offshore RMB deposits and cross-border settlement volumes increased, leading to a rise in RMB currency futures trading, with an average daily volume of 103,626 contracts, up 8.7% from 2024 [9] - The average daily turnover for ETFs reached HKD 33 billion, a 108% increase from 2024, with several innovative products launched [10] Group 3: Trading Infrastructure and Services - The Central Clearing System processed an average of 3.8 million transactions daily, a 67% increase from 2024, reflecting the market's resilience and the effectiveness of infrastructure investments [14] - The trading volume for structured products like bull-bear certificates and warrants was robust, with bull-bear certificates achieving an average daily turnover of HKD 10.5 billion, up 59% year-on-year [12]

Group 1 - Hong Kong's capital market is projected to regain the top position in global IPO fundraising in 2025, with a total of $37.4 billion, surpassing the total of the previous three years and marking the highest level since 2021 [1] - The strong performance is driven by eight IPOs exceeding $1 billion and a diverse range of new economy companies, indicating a shift towards a more diversified market structure [1] - Newly listed stocks have shown positive performance, with an average first-day increase of 23.8% and a cumulative first-month increase of 30.7%, particularly in the biotechnology and healthcare sectors [1] Group 2 - The A+H share listing has emerged as a significant highlight, with 19 A-share companies completing H-share listings in 2025, raising $17.7 billion and enhancing the international investor base for these companies [2] - By the end of 2025, 96 A-share companies had submitted applications for listing in Hong Kong, with over 70 expressing intent to list, suggesting that A+H listings may continue to be a focus in 2026 [2] - The derivatives market is expanding alongside new stock listings, with the introduction of stock options for companies like CATL, providing investors with immediate risk management tools [2]

Core Insights - The Hong Kong IPO market is expected to maintain its strong momentum from 2025 into 2026, driven by market diversification, internationalization, and an active secondary market [1][13]. Group 1: IPO Market Recovery - In 2025, Hong Kong's capital market saw a full recovery with 119 companies listed, a 68% increase from 2024, and IPO fundraising exceeding 285.8 billion HKD, marking a 225% surge [3][15]. - The biotechnology sector was particularly notable, with a growth rate exceeding 60% in 2025, attracting significant international investor interest in Chinese tech companies [6][18]. Group 2: Internationalization and Market Activity - The active secondary market supported IPOs, with the average daily trading volume in 2025 increasing by over 90% compared to 2024, maintaining around 250 billion HKD [9][21]. - International companies from regions such as Thailand, Singapore, Kazakhstan, and the Middle East have begun listing in Hong Kong, with 12 companies raising approximately 400 million USD in early 2026 [10][22]. Group 3: Product Innovation and Connectivity - The Hong Kong Stock Exchange (HKEX) is focusing on product innovation to enhance market vitality, including the introduction of the Tech 100 Index and biotechnology index futures [11][23]. - Future expansions of the "connectivity" mechanism may include integrating Real Estate Investment Trusts (REITs) and promoting "Renminbi counter" inclusion in the Hong Kong Stock Connect [11][23]. Group 4: Future Outlook - The HKEX anticipates that diversification and internationalization will be key themes for the Hong Kong stock market in 2026, with growth expected across various sectors including technology, biotechnology, and international companies [12][24].

Core Insights - The capital market has entered a recovery phase since September 24, 2024, with the Hang Seng Biotechnology Index showing a cumulative increase of 78.6%, outperforming the Hong Kong Stock Connect Innovative Drug Index, indicating high elasticity and a strong Sharpe ratio [1][4]. Performance Metrics - Annualized Return: Hang Seng Biotechnology Index at 59.42%, compared to 57.50% for Hong Kong Stock Connect Innovative Drug Index [3]. - Annualized Volatility: Hang Seng Biotechnology Index at 41.03%, slightly lower than the Hong Kong Stock Connect Innovative Drug Index at 42.66% [3]. - Maximum Drawdown: Hang Seng Biotechnology Index at -27.55%, which is comparable to other indices [3]. - Sharpe Ratio: Hang Seng Biotechnology Index leads with a ratio of 1.45, outperforming other related indices [3][4]. - Cumulative Return since 2025: Hang Seng Biotechnology Index at 67.50%, again showing superiority over similar indices [4]. Index Characteristics - The Hang Seng Biotechnology Index is the only Hong Kong medical theme index with index futures, enhancing investment strategies and liquidity [6][7]. - The introduction of index futures in November 2025 is expected to improve liquidity and attract more investment [6][7]. - The index has shown strong trading activity, with an average daily turnover of approximately 16 billion yuan in 2015 [6]. Regulatory Framework - The 18A system in Hong Kong provides a unique listing channel for unprofitable biotech companies, enhancing the attractiveness of the Hong Kong market for international capital [9][11]. - Over 70 biotech companies have listed under the 18A system, which is more flexible compared to similar regulations in other markets [11]. Investment Opportunities - The Hang Seng Biotechnology ETF (Code: 520933) is positioned as an optimal choice for investors looking to participate in the biotech sector with lower entry barriers [12].

Core Insights - The Hong Kong Stock Exchange (HKEX) has successfully raised approximately HKD 285.7 billion through 117 IPOs in 2025, marking a significant recovery in IPO fundraising, surpassing the HKD 200 billion threshold for the first time in four years and leading globally in IPO fundraising [1] Group 1: Listing System Optimization - HKEX has implemented effective measures in listing systems, market infrastructure, and product ecosystem since 2025 to enhance listing services and market liquidity [2] - The introduction of the "Tech Company Fast Track" in May 2025 facilitates the listing process for tech and biotech companies, allowing them to submit applications confidentially [2] - Reforms in August 2025 improved the pricing and public holding requirements for IPOs, providing greater flexibility and certainty for issuers while balancing the needs of local and international investors [2] Group 2: Attracting International Companies - HKEX is actively attracting international companies to list in Hong Kong by expanding the list of recognized exchanges, making it easier for overseas firms to pursue secondary listings [3] - Several Southeast Asian companies from Thailand, Indonesia, and Singapore have either listed or submitted applications in Hong Kong since 2025 [3] Group 3: Market Liquidity and Activity Enhancement - HKEX has implemented reforms to boost secondary market activity and liquidity, including lowering the minimum tick size in August 2025 to reduce trading costs and enhance price discovery [4] - The introduction of the Hang Seng Biotech Index futures in November 2025 provides risk management tools for investors, complementing existing biotech-related products [4] - The launch of the Tech 100 Index tracks 100 well-known large and mid-cap companies across six major technology sectors, enriching the product ecosystem [4] Group 4: Continued Growth in the IPO Market - The IPO market in Hong Kong continues to show strong growth, with over 300 listing applications currently under review [5] - HKEX plans to enhance its attractiveness to global investors and issuers in 2026 by developing traditional stock business alongside commodities and fixed income sectors [5] - Deloitte China predicts around 160 new listings in Hong Kong in 2026, with a minimum fundraising target of HKD 300 billion, including approximately seven large IPOs exceeding HKD 10 billion [6]