HKEX (388 HK) Buy: Regulatory risks priced-in; four catalysts ahead

Research evidence excerpt

HKEX (388 HK) Buy: Regulatory risks priced-in; four catalysts ahead

n 2Q26 (up 13% q-o-q). NB-related revenue 520.00

increased to c.10% of total revenue in 1Q26, up from 7.6% in 2025. In our view, the

rising NB contribution could support sustained outperformance versus the HSI. 430.00

3. FIC ecosystem making progress: On 7 July, the PBOC and the HKMA 07/25 01/26 07/26340.00

announced measures to further expand the investment quota and enrich the product TargetHigh: 462.80price: 502.00Low: 362.20 Current: 380.80

offering for Southbound Bond Connect (see Exhibit 9). The HKMA also expanded the Source: LSEG IBES, HSBC estimates

RMB Business Facility from RMB200bn to RMB500bn. Accelerated bond market

development could drive upside for CMU OmniClear revenue and increase demand Gary Lam*, CFA

Head of Greater China Financials Research

for related derivatives. The Hongkong and Shanghai Banking Corporation Limited

gary.lam@hsbc.com.hk

4. Product & infrastructure expansion against earlier regulatory enhancement: +852 2996 6926

HKEX is set to launch CGB Futures on 3 August. It also launched the Tech 100 Index Joanna Chan*, CFA

and expanded weekly single-stock options to 33 names amid strong demand. Analyst, Asia Financials and Fintech

The Hongkong and Shanghai Banking Corporation Limited

Separately, SFC CEO Julia Leung noted that authorities are working to expedite the joanna.ct.chan@hsbc.com.hk

inclusion of RMB counters in Southbound Stock Connect. +852 2288 4826

Discounted valuation improves attractiveness: HKEX is trading at 25x 2026e P/E, * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

around 1.2 standard deviations below its long-term average of 32x. The compression not registered/ qualified pursuant to FINRA regulations