Group 1 - The Hong Kong government is set to announce the fiscal budget for 2026-2027 on February 25, with calls from financial services legislator Lee Wai-hong for a review of the clearing system to unify margin arrangements across securities, futures, and stock options [1] - Lee suggests discussions with mainland China to deepen connectivity, exploring initiatives like "New Stock Connect," "Futures Connect," "Commodity Connect," and "License Connect" [1] - Recommendations include implementing 23-hour trading at the Hong Kong Futures Exchange, diversifying commodity futures products, enhancing promotion of the futures industry, and introducing incentive programs to stimulate trading [1] Group 2 - Lee emphasizes the need for the government to assist and attract SMEs to list in Hong Kong, suggesting a review of the positioning of GEM and the main board, as well as rebranding GEM [1] - The proposal includes leveraging new stock listings to boost business for smaller underwriters, sponsors, and brokers, while increasing demand for services from small accounting and legal firms [1] - Recommendations also call for loosening regulations related to mergers and acquisitions or reverse takeovers (RTO) for listed companies [1] Group 3 - Despite the government's stance against lowering the stock transfer tax, there are renewed calls from the industry to consider reductions, such as a single-sided rate of 0.05% or a tiered decreasing tax structure [2] - Suggestions include exempting stock transfer tax for dual-currency counters to stimulate trading and support the internationalization of the Renminbi [2] - Regarding the development of the gold market, Lee advocates for a review of legal and regulatory frameworks for traditional and innovative products, promoting gold asset tokenization and encouraging the Hong Kong Monetary Authority to adopt a friendly approach towards operators of precious metals and digital assets [2]

Core Viewpoint - The future potential for deepening the interconnection between mainland China and Hong Kong capital markets is significant, with calls from the industry and investors for further expansion of interconnection mechanisms [1][3]. Summary by Sections Interconnection Mechanisms - Suggestions were made to enhance the depth and breadth of existing mechanisms such as Stock Connect, Bond Connect, Cross-Border Wealth Management Connect, and ETF Connect [2][3]. - Over the past decade, a comprehensive interconnection system has been established, covering stocks, bonds, asset management, and derivatives, which has broadened cross-border investment channels and solidified Hong Kong's status as an international financial center [2][3]. Bond Connect - The "Southbound Bond Connect" currently only allows qualified domestic institutional investors (QDII) and 22 public market operation banks to participate, suggesting a need to expand the eligibility criteria and increase the investment quota [3][4]. Stock Connect - Recommendations include relaxing asset requirements for mainland individual investors participating in the Hong Kong Stock Connect and increasing daily trading limits to enhance market liquidity [3][4]. ETF Connect - Since its launch in July 2022, the number of eligible Southbound ETF products is approximately 17, indicating room for further expansion [3][5]. Cross-Border Wealth Management Connect - It is suggested to expand the pilot program for Cross-Border Wealth Management Connect from first-tier cities to nationwide implementation, including more suitable products in the eligible range [4][5]. IPO Mechanism - A proposal to deepen the interconnection mechanism for IPOs includes the introduction of a "New Stock Connect" on a pilot basis, which could meet the asset allocation needs of mainland investors and attract more companies to list in Hong Kong [4]. New Channels for Interconnection - Beyond optimizing existing mechanisms, there is a need to explore new channels, such as including RMB stock trading counters in the Hong Kong Stock Connect to facilitate mainland investors [5][6]. Commodity Futures - The interconnection could also be expanded to include commodity futures, as there is interest from both international and mainland investors to participate in the commodity market [6]. Hong Kong's Role - Hong Kong is viewed as a crucial gateway for mainland China to the world, enhancing its role as a "super connector" and "super value creator" in the context of high-level market opening [7][8]. - The recent introduction of the "Renminbi Trade Financing Liquidity Facility" by the Hong Kong Monetary Authority highlights the growing acceptance of the RMB in global trade financing [7][8].