Activity

Morgan Stanley is bullish on the Hong Kong Exchanges and Clearing Limited (HKEX), expecting its share price surge to continue. This positive outlook is shared by other major investment banks like Goldman Sachs and HSBC, reinforcing the sentiment that HKEX is poised for further growth.
Here’s a breakdown of the reasons for this optimism:
* Anticipated IPO Wave: A significant driver of HKEX’s revenue is its listing business. Morgan Stanley, along with other analysts, foresees a strong wave of initial public offerings (IPOs) in Hong Kong. This is fueled by:
* Mainland Chinese companies: A growing number of mainland Chinese companies are looking to list in Hong Kong, including those pursuing dual listings or considering a “return” from US markets. As of early 2025, there was a robust IPO pipeline with a significant increase in applications.
* “Special technology companies” and other sectors: Hong Kong has introduced streamlined listing rules for certain technology companies, attracting innovative firms. Technology, life sciences, and consumer brands are highlighted as key growth drivers for new listings.
* Government and regulatory support: Efforts by Chinese mainland and Hong Kong authorities to bolster the market and attract listings are paying off, as evidenced by the surge in IPO proceeds in Q1 2025 (nearly four times that of Q1 2024).
* Increased Trading Volume:
* Strong performance in Q1 2025: HKEX reported record quarterly revenue and profit in Q1 2025, with cash market headline Average Daily Turnover (ADT) more than doubling compared to Q1 2024. This indicates strong market activity.
* Southbound Capital Flow: Goldman Sachs, for example, has significantly raised its forecast for southbound capital flow (Mainland Chinese money flowing into Hong Kong stocks via Stock Connect), indicating increased interest and liquidity from mainland investors.
* Improved Financial System Cycle: Morgan Stanley’s research points to increased confidence in the financial system cycle bottoming out, suggesting a more favorable environment for capital markets activity.
* Upgraded Forecasts and Target Prices:
* Morgan Stanley has raised its target price for HKEX to HKD 500, up from previous targets, and maintains a “Shareholding” (equivalent to “Overweight” or “Buy”) rating. This is primarily due to upgraded daily trading volume and profit forecasts.
* Goldman Sachs has also raised its earnings per share forecast for HKEX for 2025, 2026, and 2027, maintaining a “Buy” rating and adjusting its target price to HKD 398.
In essence, the positive outlook for HKEX stems from a confluence of factors: a robust IPO pipeline, strong trading activity, favorable economic and regulatory conditions, and the confidence expressed by major investment banks through their upgraded forecasts and target prices. This suggests that HKEX’s strong performance seen in 2025 is likely to continue.

Video courtesy of Eurex

Video courtesy of Eurex