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Nexchip (02249.HK) opened 8% higher on the gray market at $34.88, ahead of its July 10 listing on the Hong Kong Main Board. "The gray market activity reflects strong pre-listing demand for the chipmaker," data from PhillipMart and Futu showed. The stock last printed at $35.8, up 10.8% from the listing price, on volume of 4.78 million shares and turnover of $164 million, according to PhillipMart. Futu data showed a similar trajectory, with the stock at $35.44, up 9.7%, on 4.73 million shares traded and $165.97 million in turnover. The gray market performance signals robust investor appetite for new listings on the Hong Kong exchange, which has seen a pickup in IPO activity during the first half. Bank of America Securities recently cut its price target on Hong Kong Exchanges and Clearing Ltd. (00388.HK) to HKD500, noting strong first-half IPOs but a lack of mega listings. Nexchip's gray market pricing gives the company a valuation that will be tested when regular trading begins on July 10. Investors will watch for the stock's first-day close relative to gray market levels to gauge sustained institutional demand. This article is for informational purposes only and does not constitute investment advice.
CCTC (06951.HK) edged up 0.1% on its Hong Kong debut, closing midday at HK$100.4 after opening at the listing price of HK$100.3. The muted first-day performance comes as BofA Securities cut its price target on Hong Kong Exchanges & Clearing (00388.HK) to HK$500, citing strong first-half IPO activity but a lack of mega listings, according to a note. The stock hit an intraday high of HK$109 and a low of HK$100.3 during the morning session. Volume reached 11.99 million shares, generating turnover of HK$1.2 billion. The modest debut suggests cautious institutional demand for new listings in Hong Kong, where IPO activity has picked up in volume but lacks the blockbuster deals that typically drive first-day pops. Investors will watch afternoon trading for signs of whether the stock can build momentum above its listing price. This article is for informational purposes only and does not constitute investment advice.
BofA Securities cut its price target on HKEX to HKD500 from HKD520, citing lower interest income assumptions for 2027 and 2028. "The lack of large-scale and influential IPO deals may raise concerns over future turnover growth and short-term liquidity," the BofA analysts said in a report. HKEX is expected to report 1H26 net profit of HKD10.3 billion in mid-August, up 21 percent from a year earlier. Average daily turnover hit a record HKD289 billion in the second quarter, compared with HKD277 billion in the first quarter and HKD238 billion a year ago, driving strong growth in trading and clearing fee income. The broker cut its 2027-28 earnings forecasts by 2 percent to 10 percent on lower interest income assumptions, though higher HIBOR may partially offset the impact. The new target implies 33 times projected 2026 earnings, while the stock currently trades at 25 times — a level BofA called attractive. The absence of IPOs from leading AI hardware companies is drawing attention as the Shanghai and Shenzhen markets attract multiple major tech listings. IPO fundraising in the first half reached HKD210 billion, nearly double the HKD107 billion in the same period last year, while non-IPO fundraising totaled HKD136 billion versus HKD174 billion. The overall IPO pipeline remains strong, but the lack of mega deals may weigh on future turnover growth. The People's Bank of China expanded the annual investment quota for Bond Connect Southbound Trading to RMB800 billion, and Hong Kong launched a central gold clearing system. While these initiatives may not significantly boost near-term earnings, they are expected to create long-term business opportunities for HKEX. The target cut reflects a cautious view on HKEX's interest income trajectory, but the Buy rating signals confidence in the core exchange business. Investors will watch the 1H26 results in mid-August for updates on turnover trends and IPO pipeline momentum. This article is for informational purposes only and does not constitute investment advice.
**Hong Kong's central bank is more than doubling its renminbi liquidity backstop to half a trillion yuan, adding longer-dated tenors and exploring new debt instruments in a coordinated push to cement the city's status as the world's leading offshore yuan hub.** The Hong Kong Monetary Authority will increase its RMB Business Facility to RMB500 billion ($68.7 billion) from RMB200 billion effective Friday, Chief Executive Eddie Yue said at the Hong Kong FIC & Bond Connect Summit on Tuesday. The facility will also offer nine-month, two-year and three-year tenors for the first time, extending beyond the existing six-month maximum to match corporate funding needs for capital allocation and direct investment. "The above measures are intended to better support broader use of RMB in the real economy," Yue said. "Since the launch of the RMB Business Facility last year, the banking sector has responded very positively, with utilization also increasing." The facility expansion is one of more than a dozen measures announced jointly by the HKMA, the People's Bank of China and the Securities and Futures Commission to deepen financial cooperation between Hong Kong and the mainland. The package includes the development of a Hong Kong fixed income and currency electronic trading platform, enhancements to both the Southbound and Northbound Bond Connect channels, and the launch of Hong Kong Exchanges and Clearing Ltd.'s five-year China government bond futures on Aug. 3. The Southbound Bond Connect will see its annual investment quota increased, with new provisions allowing bond repurchase transactions using Southbound bonds as collateral. The product scope will expand to include Hong Kong dollar and RMB-denominated bonds, and the channel will connect to the Macao bond market. On the Northbound side, onshore bonds issued by the Ministry of Finance and mainland policy banks held through the channel will become eligible as margin collateral at HKFE Clearing Corp. and the SEHK Options Clearing House, while settlement times will be extended to improve efficiency. The HKMA also outlined five additional measures targeting the offshore RMB market specifically. It will explore introducing a tendering mechanism for seven-day offshore RMB liquidity, examine the issuance of short-term offshore RMB debt instruments to build a yield curve, and promote a bilateral currency transaction framework between the Indonesian rupiah and offshore RMB. The authority will also issue good practices to banks to encourage RMB adoption. The moves come as Hong Kong's financial infrastructure already processes enormous RMB volumes. The city's interbank clearing system handled about RMB48 trillion ($6.6 trillion) monthly in renminbi transactions last year out of HK$105 trillion in total across all currencies, Financial Secretary Paul Chan said in a summit speech. Hong Kong arranged over $133 billion of Asia's international bond issuance last year, roughly a quarter of the regional total, while dim sum bond outstanding stock has surpassed RMB1.6 trillion. The expansion of the RMB Business Facility to RMB500 billion — a 150% increase — signals the authorities' intent to deepen the offshore yuan ecosystem at a time when the currency's international use remains modest relative to China's economic heft. China accounts for about 12% of global merchandise trade, yet the renminbi represents only about 4% of global trade settlement and roughly 2% of central bank reserves, Chan noted, framing the gap as opportunity rather than shortfall. The package addresses structural constraints that have limited offshore RMB adoption. The new longer-tenor facility options — nine months, two years and three years — fill a gap in the maturity spectrum that corporate treasurers have cited as a barrier to using RMB for direct investment and capital allocation. The planned short-term debt instruments would help establish a benchmark offshore RMB yield curve, a prerequisite for deeper institutional participation. The next milestone is Aug. 3, when HKEX's five-year China government bond futures begin trading, giving global investors a new tool to hedge onshore interest rate exposure. The PBoC and HKMA have not specified a timeline for the FIC trading platform's launch or the Bond Connect enhancements, saying only that implementation will proceed in coordination with market participants. *This article is for informational purposes only and does not constitute investment advice.*
**Hong Kong's exchange operator will seek direct participation in China's cross-border payment system, deepening the city's role as the world's largest offshore yuan hub.** Hong Kong Exchanges and Clearing Ltd. signed an agreement with the operator of China's Cross-border Interbank Payment System to explore direct participation, strengthening the city's offshore yuan settlement infrastructure. "Direct access to CIPS would enhance OTC Clear's settlement capabilities and lay the foundation for HKEX's broader FIC product and infrastructure development," Bonnie Y Chan, chief executive officer of HKEX, said. Under the memorandum of understanding, HKEX's clearing subsidiary OTC Clearing Hong Kong Ltd. intends to apply to become a direct participant of CIPS and plans to submit its application materials before the end of 2026. CIPS Co. Ltd. will provide guidance and training to support the application. As of June, CIPS had 210 direct participants, with its operations covering more than 5,200 banking institutions across 191 countries and regions. The move positions Hong Kong to capture a larger share of the growing offshore yuan market as China pushes for broader international use of its currency. Direct CIPS participation would allow OTC Clear to conduct yuan fund settlements directly through the system, reducing friction and costs for cross-border transactions. The MOU was exchanged at the 2026 Hong Kong FIC and Bond Connect Summit, witnessed by People's Bank of China Governor Pan Gongsheng, Hong Kong Chief Executive John Lee, and Financial Secretary Paul Chan. CIPS Co. Ltd. Chairman Wang Hongbo joined Chan in signing the agreement. Under the supervision of the PBoC, CIPS serves as the primary channel for cross-border yuan payments and clearing. The system has expanded rapidly since its launch in 2015, with direct participant numbers growing to 210 by mid-2026 from 176 in early 2025. The network now spans 191 countries, reflecting accelerating adoption of the yuan in trade settlement and investment flows. For HKEX, the agreement supports its broader strategy to develop Hong Kong's fixed income and currencies ecosystem. The exchange has been expanding its FIC product suite, including yuan-denominated bonds and currency derivatives, as part of efforts to diversify beyond its core equities business. Direct CIPS access would give OTC Clear participants more efficient settlement, potentially driving higher volumes in HKEX's clearing services. The partnership also signals deepening financial integration between Hong Kong and mainland China. Hong Kong remains the world's largest offshore yuan clearing center, processing about three-quarters of all offshore yuan payments, according to SWIFT data. The CIPS link reinforces that position by providing a direct pipeline to China's domestic payment infrastructure. This article is for informational purposes only and does not constitute investment advice.
**Hong Kong Exchanges and Clearing will list 5-year Chinese government bond futures on Aug. 3, giving international investors a new tool to hedge onshore interest rate risk as the city cements its status as the world's top cross-border wealth hub.** Hong Kong Exchanges and Clearing plans to list 5-year Chinese government bond futures on Aug. 3, expanding its fixed-income toolkit as the city deepens its role as a gateway to China's $20 trillion-plus bond market. "The contract gives offshore investors a direct way to manage interest rate exposure tied to China's onshore bond market," a person familiar with the matter said, speaking on condition of anonymity because the details are not yet public. The new futures contract joins a suite of China connectivity products including Stock Connect, Bond Connect, Swap Connect and MSCI China A50 Connect Index Futures. Hong Kong's assets under management surged 20% to a record HK$42.2 trillion ($5.38 trillion) in 2025, according to a Securities and Futures Commission survey, with net fund inflows rising nearly threefold to HK$2.1 trillion. Investors from outside mainland China and Hong Kong accounted for more than 54% of total AUM in recent years, the SFC said. The product launch deepens offshore access to China's government bond market, the world's second-largest, and supports renminbi internationalization at a time when Hong Kong has overtaken Switzerland as the top cross-border wealth hub, per Boston Consulting Group rankings published in May. The 5-year tenor is the most actively traded segment of China's government bond curve, with the onshore version at the China Financial Futures Exchange seeing daily turnover exceeding 200 billion yuan. **Bond futures fill a gap in China's offshore derivatives market** International investors holding Chinese government bonds — which have attracted record foreign inflows as China's yields offer a premium over developed-market debt — have lacked a liquid offshore venue to hedge duration and interest rate risk. The contract arrives as HKEX's share price trades at HK$367.6, down 11.59% year to date, even as the exchange's 3-year total shareholder return stands at 39.08%. The stock carries a price-to-earnings multiple of 24.6 times, above the Hong Kong Capital Markets industry average of 13.2 times. The SFC has signaled continued support for product innovation. "The SFC remains committed to continued regulatory enhancements to foster Hong Kong's competitiveness as a premier international financial centre and a leading offshore renminbi hub," Elisa Ng, the SFC's Executive Director of Investment Products, said in the recent AUM survey report. Hong Kong is also considering waiving tax on fund managers' performance bonuses to lure investment talent, Reuters reported in May, citing people familiar with the matter. **What the launch means for HKEX's revenue mix** The bond futures contract adds a recurring revenue stream from trading and clearing fees at a time when HKEX's core listing business faces competition from onshore exchanges. The exchange has been diversifying into derivatives and fixed-income products, with the MSCI China A50 Connect Index Futures and Swap Connect both launched in recent years. If the 5-year China government bond futures achieve volume comparable to similar offshore renminbi products, they could contribute meaningfully to HKEX's revenue. The exchange's narrative fair value of HK$519.24 per share implies a 29.2% upside from current levels, though the premium valuation leaves limited room for disappointment if volumes underwhelm. This article is for informational purposes only and does not constitute investment advice.
**China's new cross-border capital scrutiny measures have erased a combined $30 billion-plus from Hong Kong-listed financial stocks, with insurers bearing the brunt.** China's securities regulator ordered brokerages to curb cross-border swap activities for domestic funds, targeting rule-bending offshore investments that channel mainland capital into overseas equities, according to a June 26 directive. The crackdown aims to redirect mainland investor flows toward domestic technology champions rather than American stocks, the Economist reported, as Beijing tightens oversight of capital account compliance rather than managing the yuan exchange rate. "The direct impact on banks' core businesses is expected to be limited, and the outlook for fee income and net interest income remains resilient," HSBC Global Investment Research said in a report. The broker noted that wealth management income accounts for only 8% of BOC Hong Kong's total revenue in 2025, while brokerage fees, foreign-exchange-related income and loan demand remain underpinned by corporate overseas expansion. Since the announcement, AIA Group Ltd. has fallen 16.1% and Hong Kong Exchanges & Clearing Ltd. has declined 10.5%, while BOC Hong Kong has held relatively steady. HSBC maintained a Buy rating on HKEX with a price target of HKD528 and on BOC Hong Kong with a target of HKD53.2, while keeping a Hold on AIA at HKD81. Southbound Stock Connect flows remain stable with no evident net outflows, the broker said, suggesting the selloff reflects sector-specific concerns rather than broad capital flight. The measures represent Beijing's latest effort to enforce capital account compliance without triggering destabilizing outflows. For insurers, the stakes are higher: AIA derives about 20% of its 2025 new business value from mainland Chinese visitors purchasing policies in Hong Kong, a channel that faces tighter scrutiny under the new rules. HSBC expects authorities to provide further guidance on insurance sales, distribution and enforcement, creating an extended period of uncertainty for the sector. **Banks Prove More Resilient** BOC Hong Kong's limited exposure to wealth management fees — just 8% of 2025 revenue — insulates it from the regulatory shift, HSBC said. The bank may even benefit indirectly: reduced liquidity inflows into Hong Kong could lift the Hong Kong Interbank Offered Rate, expanding net interest margins. HSBC maintained its Buy rating on the lender with a target price implying roughly 15% upside from current levels. HKEX's 10.5% decline reflects market concern that slower capital inflows could curb wealth product distribution through the exchange's platform, though HSBC said the new rules have only a mild impact on its operations. The exchange relies primarily on regulator-approved Stock Connect channels, which remain unaffected. Goldman Sachs reiterated its Buy rating on HKEX, noting that offshore China government bond futures would boost revenue and diversification. **Insurers Face Greater Uncertainty** AIA's 16.1% drop makes it the hardest-hit major financial stock, reflecting the concentration risk in its mainland visitor business. The Hang Seng Index has fallen about 3% over the same period, meaning AIA has underperformed the broader market by roughly 13 percentage points. HSBC's Hold rating with a HKD81 target suggests limited upside from current levels until regulatory clarity emerges. The last time China tightened cross-border insurance distribution rules in 2016, premiums from mainland visitors to Hong Kong fell 30% over the following six months, according to industry data. A similar contraction would reduce AIA's new business value by approximately 6 percentage points, assuming the 20% contribution share holds. This article is for informational purposes only and does not constitute investment advice.
Hong Kong Exchanges and Clearing Ltd. listed the first ETF tracking its HKEX Tech 100 Index on Friday, a milestone in the exchange operator's push to build an index business that generates new revenue from investment products. "We are delighted to celebrate the listing of the first ETF based on an HKEX branded index," Bonnie Y Chan, chief executive officer of HKEX, said in a statement. "This ETF combines a representative Hong Kong technology benchmark with a widely accessible investment vehicle, supporting investors in diversifying their portfolios." The E Fund (HK) HKEX Tech 100 Index ETF, trading under stock code 3456, debuted on the 26th anniversary of HKEX's own listing as a publicly traded company in 2000. The HKEX Tech 100 is a broad-based index tracking the 100 largest technology-related companies by market capitalization listed in Hong Kong, spanning new economy sectors including internet, software and hardware. The index comprises stocks eligible for Southbound trading under Stock Connect, the cross-border investment channel linking Hong Kong and mainland China. The listing marks the first time an investment product has been built on an HKEX-branded equity index, opening a new revenue stream for the exchange group as it competes with established index providers such as MSCI and S&P Dow Jones. HKEX has also recently launched the HKEX Bursa Malaysia Large Cap Index, the HKEX KRX Semiconductor Index and the HKEX Tech & US Tech 100 Index, part of a broader strategy to strengthen market connectivity across Asia. "E Fund is deeply honored to be the first institution to launch this ETF," said Liu Xiaoyan, chairperson of E Fund Management Co Ltd. "The index brings together 100 of the high-potential technology companies in the Hong Kong market, and we hope to open an efficient gateway for global investors to participate in the future of China's technology sector." Since becoming a publicly traded company in 2000, HKEX has evolved from a local exchange into a leading global market operator, according to the company. The exchange group has been expanding its index business to diversify revenue beyond traditional trading and clearing fees, which have faced pressure from lower turnover in recent years. The HKEX Tech 100 Index was designed to address growing demand for diversified exposure to the technology sector, the exchange said. The index's eligibility for Southbound Stock Connect trading means mainland Chinese investors can access the constituent stocks through the cross-border channel, a feature that distinguishes it from other Hong Kong tech benchmarks. HKEX said it will continue to work with asset managers and index users to develop new index-based products, reinforcing Hong Kong's position as an international financial center and gateway between China and global markets. This article is for informational purposes only and does not constitute investment advice.