Core Viewpoint - The process of public ETF products "going abroad" is accelerating, with significant expansion in the mutual access ETF products between mainland China and Hong Kong, enhancing overseas investment channels for A-shares [1][3]. Group 1: ETF Expansion Details - As of January 19, 98 new ETF products have been included in the mutual access scheme, increasing the total from 273 to 364, marking a 33.3% growth and the largest single expansion since the mechanism's launch in July 2022 [1][3]. - The newly included ETFs consist of 54 from the Shanghai Stock Exchange and 44 from the Shenzhen Stock Exchange, with 7 ETFs temporarily removed from the scheme [4]. - The new ETFs cover a variety of categories, including broad-based, industry themes, and strategy-based products, with a notable inclusion of 25 ETFs tracking the CSI A500 index and nearly 20 ETFs focused on artificial intelligence or chip-related indices [4]. Group 2: Market Implications - The expansion involves 29 public fund companies, with a focus on leading firms such as Huaxia Fund, which has 14 ETFs included, and E Fund with 10 ETFs [5]. - Analysts suggest that the expansion reflects a shift in foreign investment strategies from broad market purchases to more structured and thematic investments, particularly in technology and high cash flow assets [5][8]. - The inclusion of dividend and cash flow ETFs indicates a strong demand for defensive assets among foreign investors [5]. Group 3: Internationalization of ETFs - The listing of the Southern Asset Management CSI A500 Index ETF on the Singapore Exchange marks the first instance of a CSI A500 ETF "going abroad" under the mutual access mechanism, providing Singaporean investors with efficient access to A-share core companies [7]. - This development is expected to enhance the global influence of A-share ETFs and facilitate the internationalization of Chinese capital markets [7][8]. - The ongoing expansion of the mutual access mechanism is anticipated to attract more long-term capital into the market, particularly in sectors favored by foreign investors [8].

Core Viewpoint - The expansion of the ETF Connect on January 19 has added 98 new ETFs, bringing the total to over 360, marking a significant increase of over 30% and providing cross-border investors with new investment opportunities [2][3]. Group 1: ETF Connect Expansion - 98 ETFs were officially included in the Northbound Stock Connect, with 54 added to the Northbound Shanghai Stock Connect and 44 to the Northbound Shenzhen Stock Connect [3]. - The inclusion of the CSI A500 ETF and various thematic ETFs related to aerospace, high-end manufacturing, and artificial intelligence has diversified investment options for investors [2][3]. - The total trading volume on the first day of expansion exceeded 738 billion yuan, with nearly 40% of the products seeing increased trading volume compared to previous periods [4]. Group 2: Market Impact and Future Trends - The expansion is expected to enhance the A-share allocation tools for foreign investors and attract more professional investors and incremental capital to the domestic ETF market, thereby increasing China's capital market's international influence and competitiveness [4]. - The trading heat and transaction amounts of the ETF Connect have been steadily increasing, with projections indicating that by 2025, northbound funds through the ETF Connect will reach approximately 8165.82 billion yuan, a 76% increase from 2024 and over six times that of 2023 [6]. - Factors driving the increased popularity of the ETF Connect include policy support, mechanism optimization, enhanced market liquidity, diversified investor demand, product innovation, and improved market sentiment [6].

Group 1 - The core viewpoint of the news is the expansion of the ETF Connect, which now includes 98 new ETFs, bringing the total number to over 360, marking a significant increase of over 30% [1][2] - The newly included ETFs cover a range of sectors, including popular themes such as aerospace, high-end manufacturing, and artificial intelligence, enhancing investment options for cross-border investors [1][2] - The trading volume on the first day of the expansion exceeded 738 billion yuan, with nearly 40% of the products seeing increased trading activity compared to previous periods [1][3] Group 2 - The expansion involved 29 fund companies, with notable contributions from major players like Huaxia Fund and E Fund, which added 14 and 10 ETFs respectively [2] - The inclusion of the CSI A500 ETF has garnered significant attention, with several funds related to it exceeding 40 billion yuan in scale [2][3] - The ongoing development of the ETF Connect since its launch in July 2022 has led to a steady increase in trading activity and product diversity, making ETFs a crucial tool for cross-border asset allocation [4][5] Group 3 - Future projections indicate that by 2025, northbound funds through the ETF Connect are expected to exceed 8165.82 billion yuan, representing a 76% increase from 2024 and over six times the amount from 2023 [5] - The trading volume is anticipated to remain high, with monthly transactions expected to consistently surpass 600 billion yuan, reflecting sustained interest from investors [5] - Factors driving the increased popularity of the ETF Connect include policy support, enhanced market mechanisms, and diversified investor demand, which collectively contribute to the deep integration of market rules and investor structures between the two regions [6]

Core Insights - The "ETF Connect" program is set to expand significantly at the beginning of the year, with 98 new products being added, increasing the total from 273 to 364, a growth of over 30% [1][6] - In 2025, the northbound capital through "ETF Connect" reached a record high of 816.58 billion yuan, marking the highest annual amount since the program's inception [1][12] - The inclusion of more ETFs is expected to enhance market vitality and liquidity in both Hong Kong and mainland China [1] Group 1: Expansion Details - On January 19, 54 ETFs listed on the Shanghai Stock Exchange will be included in the northbound Shanghai Stock Connect, while 44 ETFs from the Shenzhen Stock Exchange will be added to the northbound Shenzhen Stock Connect [3][6] - A total of 98 new ETFs will be added, including notable products like the CSI A500 ETF and satellite ETFs, which will diversify investment options for investors [2][10] Group 2: Market Impact - The expansion of "ETF Connect" is anticipated to significantly boost the trading volume and liquidity of ETFs in both markets, thereby promoting the development of the ETF market [1][12] - The record trading volume in 2025 is attributed to the continuous expansion of the product pool, optimization of the system, and favorable market conditions [12] Group 3: Fund Companies Involved - The new additions to "ETF Connect" involve 29 fund companies, with Huaxia Fund leading with 14 ETFs, followed by E Fund with 10, and others like Fortune and Huitianfu with 7 and 6 products respectively [10] - The inclusion of the CSI A500 ETF marks a significant milestone, with major fund companies like Huatai-PB and Southern Fund having substantial assets under management in these ETFs [10]

Investment Rating - The report assigns an "Accumulate" rating to the company [4]. Core Insights - The company achieved record high performance in the first three quarters of 2025, with revenue and other income reaching HKD 21.851 billion, a year-on-year increase of 36.63%, and net profit attributable to shareholders reaching HKD 13.419 billion, up 44.8% year-on-year [1][15][24]. Summary by Sections 1. Revenue and Profit Growth - In Q3 2025, the company reported a revenue of HKD 7.775 billion, representing a year-on-year growth of 44.73%, and a net profit of HKD 4.9 billion, marking a historical high with a year-on-year increase of 55.80% [1][15]. - The growth in revenue is primarily driven by increased trading activity, with trading fees and settlement fees contributing significantly to the revenue increase [16][55]. 2. Market Dynamics - The proportion of southbound trading has been steadily increasing, accounting for 53% of the overall trading volume in the Hong Kong stock market by Q3 2025, up from 12% in 2019 [2]. - The average daily trading amount (ADT) for the Hong Kong stock market increased by 126% year-on-year to HKD 256.4 billion, with the southbound trading ADT growing by 229% to HKD 125.9 billion [16]. 3. IPO Activity - The acceleration of A-share companies listing in Hong Kong is expected to enhance the revenue elasticity of the Hong Kong Stock Exchange, with over 170 A-share companies planning to list in Hong Kong by November 2025 [3][64]. - The IPO market in Hong Kong is projected to raise HKD 280 billion (approximately USD 36 billion) in 2025, marking a 137% increase from 2024 [65]. 4. Business Model and Competitive Advantage - The company operates a vertically integrated business model with multiple exchanges and clearing companies, enhancing operational efficiency and cost control [4][42]. - The diversified product offerings, including stocks, derivatives, commodities, and data services, create a robust ecosystem that mitigates the impact of market volatility on performance [7][50]. 5. Financial Projections - Revenue projections for 2025-2027 are estimated at HKD 24.81 billion, HKD 26.97 billion, and HKD 28.95 billion, respectively, with net profits expected to be HKD 14.50 billion, HKD 15.95 billion, and HKD 17.55 billion [8][10].

Group 1 - The year 2025 marks the beginning of a new decade for the interconnection between mainland and Hong Kong capital markets, with expectations for deeper integration [1] - Since the launch of the Shanghai-Hong Kong Stock Connect in 2014, the range of interconnected financial products has expanded from stocks to various other financial instruments, including ETF Connect and Bond Connect [1] - The average daily trading volume for northbound and southbound trading has increased significantly, with a 21-fold and 40-fold growth respectively compared to the first month of operation in 2014 [1] Group 2 - Industry experts emphasize the need to simplify trading processes and align institutional, informational, and technical elements to enhance the integration of stock markets [1] - Current rules for the Hong Kong Stock Connect are complex, leading to difficulties for investors in understanding the criteria for inclusion and exclusion of stocks [1][2] - The calculation method for market capitalization under the Hong Kong Stock Connect has not been updated to align with the new methodology adopted by the Hang Seng Index, which could lead to misinterpretations by investors [2] Group 3 - The adjustment in the Hang Seng Index's calculation method is seen as more scientific, potentially increasing the quality of stocks eligible for the Hong Kong Stock Connect [2] - There are expectations that the rules for the Hong Kong Stock Connect will be revised to match the Hang Seng Index's calculation method by the second half of 2025 [3] - The deepening of interconnectivity is viewed as crucial for the development of both capital markets, enhancing their international competitiveness and facilitating high-quality growth [3]

Core Viewpoint - The "ETF Connect" initiative, which facilitates interconnectivity between mainland China and Hong Kong financial markets, is entering a new phase of high-quality development as it marks its third anniversary, with significant potential for future growth as global investors increasingly focus on the Chinese market [1]. Group 1: Future Development Prospects - Industry insiders believe that the future of "ETF Connect" is promising, with expectations of attracting more market participants and investors as the Chinese market gains global attention [1]. - As foreign investors' awareness of A-share ETFs increases, "ETF Connect" is anticipated to become a key direction for foreign institutions' asset allocation [6]. - The expansion of the scope of eligible assets under "ETF Connect" is expected to provide more opportunities for domestic investors to allocate global assets [6]. Group 2: Strategies for Growth - Fund companies are encouraged to innovate in product design, enhance liquidity, and promote investor education to drive the development of "ETF Connect" [2]. - Continuous improvement in product layout and innovation is essential to provide a wider range of options for foreign investors [2]. - Fund companies should focus on developing differentiated ETF products that reflect the characteristics of Chinese assets and enhance collaboration with overseas institutions [3]. Group 3: Product and Market Development - There is a need for fund companies to expand their product lines to cover more asset classes and develop unique indices to meet diverse investor needs [4]. - Enhancing investor education is crucial, particularly regarding cross-border investments, to improve understanding and usage of ETF products [4]. - Fund companies should actively participate in roadshows and training sessions organized by exchanges to reach more overseas clients and increase awareness of A-share ETFs [5]. Group 4: Mechanism Optimization - The "ETF Connect" mechanism requires optimization, including expanding the range of eligible products to include bond and commodity ETFs, and enhancing cooperation with overseas institutions [7]. - Suggestions include relaxing entry restrictions for product types and improving trading mechanisms to enhance cross-border investment efficiency [7]. - Continuous optimization of the "ETF Connect" mechanism is necessary to improve investor trading experience and efficiency [8].

Core Insights - Hong Kong Exchanges and Clearing Limited (HKEX) celebrated its 25th anniversary, evolving from a local exchange to a leading global international exchange [1] - In 2025, HKEX's IPO financing amount is expected to reclaim the global top position after six years, with 31 IPO projects raising a total of 884 billion HKD this year, surpassing last year's total [1][2] - The daily trading volume in the securities market has increased from approximately 130 billion HKD in 2000 to over 2400 billion HKD, representing a more than 17-fold increase [1] - The market capitalization has grown from 86 billion HKD in 2000 to 4960 billion HKD, an increase of over 56 times [1] - The number of listed companies on the Hong Kong stock market has surged from 790 to over 2600 [1] IPO Trends - From 2009 to 2021, HKEX ranked first globally in IPO fundraising seven times, but faced a decline starting in 2022, only returning to the top five in 2023 due to large companies like Midea listing [2] - Between 2014 and 2024, HKEX's cumulative IPO fundraising reached 303 billion USD, surpassing NASDAQ and NYSE, with mainland companies becoming a significant pillar of this market [2] - As of June 8, 2023, there are 165 mainland companies queued to list on HKEX, a significant increase from nearly 80 in mid-January [2] Market Reforms and Innovations - HKEX has implemented various reforms over the past 25 years, adapting to market needs and attracting a diverse range of investors and products [3] - The exchange has shifted its listing rules to accommodate unprofitable companies, particularly in the biotech and internet sectors, which are now seen as valuable listings [3] - HKEX aims to position itself as a leading fundraising hub for new economy and biotech companies, as well as a global offshore RMB business center [3] Cross-Border Financial Cooperation - The launch of the Cross-Border Payment System on June 22 aims to enhance financial cooperation between mainland China and Hong Kong, facilitating cross-border remittances [5] - Since the introduction of various mutual market access programs, the total balance of foreign investment in onshore stocks has increased over five times, with mainland companies now accounting for 81% of the total market capitalization of HKEX [5] - The mutual access mechanisms have expanded from stocks to include bonds, ETFs, and interest rate swaps, with further developments planned [6] Future Outlook - HKEX is focused on enhancing its market resilience and vibrancy, with ongoing improvements to trading systems and infrastructure [6] - The recent policy changes allow companies listed on HKEX in the Guangdong-Hong Kong-Macao Greater Bay Area to also list on the Shenzhen Stock Exchange, potentially increasing the number of "H+A" listed companies [6]

Core Viewpoint - The "ETF Connect" program has reached 265 products, showing increasing popularity and trading volume, with significant growth in both northbound and southbound transactions since its launch in July 2022 [1][3][6]. Product Expansion - The number of products under "ETF Connect" has increased by 178 since its inception, with 160 from the Shanghai Stock Connect, 88 from the Shenzhen Stock Connect, and 17 from the Hong Kong Stock Connect [3][4]. - The program is set to expand further in June 2024, with relaxed rules such as lowering the scale threshold from 1.5 billion to 500 million and adjusting index weight requirements from 90% to 60%, allowing more small-cap and thematic ETFs to be included [3][4]. Trading Volume Growth - Northbound trading volume reached 415.14 billion RMB in May 2023, a 95-fold increase compared to the first month of operation in July 2022, with historical peaks of 1,090.15 billion RMB in October 2024 [7][8]. - Southbound trading also saw significant growth, with May 2023 transactions at 460.39 billion HKD, and monthly averages for the first five months exceeding 760.51 billion HKD, with April 2023 hitting a record high of 1,207.06 billion HKD [7][8]. Market Dynamics - The increase in trading activity is attributed to multiple factors, including policy support, market liquidity, and diverse investor demand, alongside product innovation and improved market sentiment [7][8]. - The attractiveness of Hong Kong stocks to mainland investors is highlighted by the performance of specific ETFs, such as the innovative drug ETF and high-dividend ETFs, which have seen substantial gains [8]. Future Development - The future of "ETF Connect" is seen as promising, with expectations for further product diversification and the inclusion of other asset classes like bonds [10][16]. - Fund companies are encouraged to innovate in product design, enhance liquidity, and improve investor education to better serve both domestic and international investors [12][14][15]. - Optimizations in the trading mechanism and product admission criteria are suggested to enhance the efficiency and appeal of "ETF Connect" [17][18].

Core Viewpoint - The "ETF Connect" has significantly transformed the capital market landscape in China over the past three years, enhancing trading activity and providing new momentum for market development [1][2]. Summary by Sections Development and Growth of "ETF Connect" - Since its launch on July 4, 2022, the number of "ETF Connect" products has increased from 87 to 265, reflecting a substantial expansion in product offerings [3][4]. - Trading volume has surged, with northbound trading reaching a total of 256.36 billion RMB in the first five months of the year, a 148% increase compared to the same period last year, while southbound trading amounted to 416.34 billion HKD, a 180% increase [3][4]. Impact on Market Integration and Internationalization - "ETF Connect" has played a crucial role in enhancing the integration of domestic and Hong Kong markets, facilitating cross-border investment and promoting the internationalization of the RMB [4][5]. - The mechanism has been recognized as a key component of China's financial opening strategy, providing a more convenient and efficient investment channel compared to traditional methods like QFII and RQFII [7][8]. Advantages of "ETF Connect" - The mechanism allows for easier access to a diverse range of investment products without the complexities of qualification and capital approval processes, thus attracting more international investors [7][8]. - "ETF Connect" has been described as a "passive investment bridge" that not only enhances trading activity but also fosters deeper integration of market rules, valuation systems, and investor structures between mainland China and Hong Kong [8][9]. Future Potential and Innovations - The lowering of entry thresholds for "ETF Connect" is expected to further stimulate product innovation and layout by asset management institutions in both regions [8]. - The inclusion of REITs and support for leading domestic companies to list in Hong Kong are among the measures being implemented to inject new vitality into the capital market [9].