Staff Reporter
Analysts are optimistic about a bullish year ahead for the Hong Kong Exchange (HKEX), predicting a 55% year-on-year increase in average daily turnover (ADT) for FY25F, according to CGS International.
The expected market upturn is set to elevate HKEX’s price-to-earnings (P/E) multiple by 18%, establishing a target price of $490—representing a 36.2% upside from its current trading price of $359.8.
A surge in southbound capital flows is anticipated to enhance HKEX’s momentum, with net inflows projected to reach $1.2 billion in 2025F, marking a 50% increase from the previous year.
The demand for new economy stocks has already surpassed the total inflows of 2024, with analysts forecasting a 110% rise in southbound ADT for FY25F. This growth is expected to bolster liquidity and solidify HKEX’s status as a leading trading hub.
HKEX is also on track to reclaim its title as the world’s top IPO market, with fundraising projected to hit $160 billion in 2025—an 80% increase from 2024.
This surge is primarily driven by Chinese companies relocating their listings from the U.S. to Hong Kong amid increased regulatory scrutiny. New policies designed to attract mainland firms are likely to further stimulate IPO activity.
Despite a 45% rise in HKEX’s P/E multiple from 2024 to early 2025, analysts suggest the exchange remains undervalued compared to its post-2016 average, indicating further growth potential.
They estimate that a 10% increase in ADT could enhance HKEX’s net profit by 7%, reinforcing a robust earnings outlook.
While the outlook remains positive, analysts advise caution regarding potential impacts from lower interest rates on HKEX’s investment income, as well as the influence of geopolitical tensions and shifts in China’s A-share IPO policies on market sentiment.
Nevertheless, with increasing capital inflows and a revitalized IPO pipeline, HKEX is well-positioned for a year of accelerated growth.
