HKEX (0388.HK): Stronger-for-longer capital market activity

We expect a more durable up-cycle in Hong Kong's capital market, supported by China's positive financial development loop: headline ADV reached HK$277bn in 1Q26 and HK$290bn in 2Q26; Northbound ADV rose 70% and 141% YoY. We expect capital market activity to remain elevated as household financial assets expand and asset allocation shifts from deposits to fund products. The IPO backdrop also remains strong, with HK$342bn raised in January-August and 501 applications in process as of end-August. Derivatives are becoming a more meaningful structural growth driver, led by stock options with rising demand for shorter-dated products such as weekly stock options; fixed income and commodities represent another long-term opportunity under HKEX's multi-asset strategy, with the five-year CGB futures launch recording encouraging trades. We raise our headline ADV estimates to HK$268bn for 2026, HK$285bn for 2027, and HK$300bn for 2028; trading fee forecasts rise 4.6%, 4.2%, and 3.8%;