UBS has released a research report summarizing key takeaways from Hong Kong Exchanges and Clearing Limited's financial corporate day. The bank believes that southbound capital's contribution to overall average daily turnover (ADT) has normalized, and it maintains a "Neutral" rating with a target price of HK$420.
UBS noted that from the beginning of 2026 through November 9, southbound capital's contribution to overall ADT declined by 3 percentage points year-on-year to 21.5%, yet overall ADT remained resilient, rising 2% year-on-year. Hong Kong Exchanges and Clearing Limited (HKEX) mentioned that southbound participation had previously been supported by the performance of internet, high-dividend, and new consumer stocks, and that mainland insurance companies are expected to become an incremental source of southbound capital going forward; insurers were permitted to invest in southbound ETFs starting in September, and their participation is expected to gradually increase.
Regarding the impact of Nasdaq's extended trading hours, Hong Kong Exchanges and Clearing Limited (HKEX) believes the short-term impact is relatively limited, for reasons including that US overnight trading (from 8 PM to 4 AM US time) currently accounts for only about 1% of total US equity trading volume, while ADR volume for dual-listed stocks represents less than 10% of the corresponding Hong Kong stock trading volume. Hong Kong Exchanges and Clearing Limited (HKEX) also plans to publish a discussion paper on extending cash equity trading hours to gather market feedback.
On the IPO front, Hong Kong IPO activity has slowed in recent months following a strong first half, with some listing applicants reassessing their listing timetables due to weak market conditions and valuation changes; however, Hong Kong Exchanges and Clearing Limited (HKEX) has extended the validity period of listing applications to 12 months, allowing issuers to delay their offerings without resubmitting applications, meaning some pipeline projects may be delayed rather than withdrawn, and IPO activity could see a notable recovery if market conditions improve.
UBS also mentioned that Hong Kong Exchanges and Clearing Limited (HKEX) is studying differentiated market data packages and pricing by client category, and is seeking to fill gaps in existing index products, with the HKEX Tech 100 Index being an early example.
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