Understanding the Market | HKEX plunges 15%, HSBC says daily trading volume of Hong Kong stocks sharply rising may be temporary, limited upside for HKEX

Hong Kong Exchanges and Clearing Limited plummeted 15% in early trading. As of the time of publication, it fell by 13.31% to HKD 341.4, with a turnover of HKD 78.47 billion. HSBC Global Research issued a research report stating that the surge in Average Daily Trading (ADT) volume during the National Day holiday is only temporary as mainland investors were unable to invest in A-shares. Furthermore, expectations for Hong Kong stocks have also increased. The current market price of HKEX already reflects a daily trading volume between HKD 155 billion and 170 billion from the fourth quarter of 2024 to 2026, an increase of 37-50% compared to the first 9 months of 2024. The bank also did not see clear evidence that structural issues in the industry have been resolved. HSBC stated that the average daily trading volume (ADT) for 2024, 2025, and 2026 is expected to be raised to HKD 121 billion, 160 billion, and 170 billion respectively, with profit forecasts also increased by 5.4%, 16.9%, and 18.1%. The target price has been raised by 26% from HKD 300 to HKD 378. The rating has been downgraded to "Hold" as the bank believes that there is limited room for further stock price increase