Record ETF Turnover and Global Inflows Might Change the Case For Investing in Hong Kong Exchanges (SEHK:388)

• Hong Kong Exchanges and Clearing reported that its exchange-traded fund (ETF) market achieved record average daily turnover of HK$37.8 billion in the first nine months of this year, alongside a rise in new ETF listings and strong investor interest from mainland China, Asia, the Middle East, and Europe.
• Growth in Hong Kong’s ETF market is fueled by enhanced international connectivity and the introduction of innovative products, such as virtual-asset and income-focused ETFs.
• We’ll explore how global investor inflows and record ETF turnover could influence HKEX’s longer-term business growth assumptions and overall investment narrative.

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Hong Kong Exchanges and Clearing Investment Narrative Recap

For shareholders of Hong Kong Exchanges and Clearing (HKEX), the core belief is in Asia’s role as a global economic engine and HKEX’s position as a financial gateway between China and the world. The record-breaking ETF turnover reinforces this narrative and supports short-term optimism about expanded international inflows, but does not materially change the primary catalyst, which remains expanding global connectivity, or the major risk of rising competition from mainland exchanges.

The recent announcement of a Memorandum of Understanding between HKEX and the Abu Dhabi Securities Exchange ties directly to international growth and cross-border capital flow, providing additional context for the ETF turnover milestone. This kind of partnership underscores the importance of geographic and product diversification to support recurring revenues in the face of evolving competitive threats and shifting investor preferences, both of which remain top of mind for many tracking the stock.

However, investors should be aware that if regulatory changes affect Southbound and Northbound capital flows, the impact could...

Read the full narrative on Hong Kong Exchanges and Clearing (it's free!)

Hong Kong Exchanges and Clearing's outlook forecasts HK$30.5 billion in revenue and HK$19.3 billion in earnings by 2028. This is based on analysts' assumptions of 6.1% annual revenue growth and a HK$3.9 billion earnings increase from the current earnings of HK$15.4 billion.

Uncover how Hong Kong Exchanges and Clearing's forecasts yield a HK$494.07 fair value, a 15% upside to its current price.

Exploring Other Perspectives

Community-sourced fair value estimates for HKEX range widely from HK$214 to HK$9,516.99, with six perspectives from the Simply Wall St Community. While some see extreme upside, the outlook for global investor inflows and product innovation remains crucial for future performance, explore several viewpoints to form your own perspective.

Explore 6 other fair value estimates on Hong Kong Exchanges and Clearing - why the stock might be worth less than half the current price!

Build Your Own Hong Kong Exchanges and Clearing Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Hong Kong Exchanges and Clearing research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Hong Kong Exchanges and Clearing research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Hong Kong Exchanges and Clearing's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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