Hong Kong Stock Exchange (00388): Hong Kong ETP market value reaches 463 billion Hong Kong dollars, becoming the hub of Asian ETFs.

The Hong Kong Stock Exchange (00388) stated that the Hong Kong ETP (Exchange Traded Products, including ETFs and leveraged and inverse products) market entered its 25th year in November this year, and after years of development, has become the hub of Asian ETFs, covering 195 products with a market value reaching HK$463 billion by the end of November. The first ETF in Asia (excluding Japan) was listed in Hong Kong in 1999, opening the door for the Hong Kong ETF market. Subsequently, ETFs covering Hong Kong stocks, A-shares, bonds, and gold were gradually introduced. As the market matured, product offerings became more diverse and consistently led the market. For example, the first A-share ETF in the world was launched in 2004; the first bond ETF in Asia was launched in 2005; the first batch of leveraged and inverse products in Hong Kong was launched in 2016, followed by the first batch of physical asset ETFs in Asia in April of this year, and the first Bitcoin inverse product in Asia in July. Currently, there are 10 virtual asset ETPs listed in Hong Kong, with a total market value of HK$5.5 billion by the end of November. The Hong Kong ETF market has seen a growth rate over the past five years, with an average daily trading volume compound annual growth rate of up to 30%. The average daily trading volume in the first 11 months of this year reached HK$18.7 billion. In recent years, the structure of the ETF market has continued to improve. For example, in 2020, a new price table was introduced, reducing the maximum lower and upper price limits by up to 80%, thereby narrowing the bid-ask spread, effectively increasing market liquidity and reducing trading costs, which in turn led to an increase in trading volume. In addition, ETF Connect officially launched on July 4, 2022, injecting new liquidity into the market, allowing international investors to invest in the mainland market through ETFs. After the expansion of ETF Connect in July of this year, there are now a total of 242 qualified ETFs for the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. In November, the average daily trading volume of northbound trading reached RMB 4 billion, while the average daily trading volume of southbound trading was HK$4.4 billion. The Hong Kong Stock Exchange stated that new technologies and internationalization will be important factors driving the development of the Hong Kong ETF market. In terms of technology, HKEX recently announced plans to digitize and automate the physical subscription and redemption mechanism of ETFs through online platforms by 2025, in order to improve the overall efficiency of the ETP market and continue to drive activity in the secondary market. HKEX pointed out that the product offerings in the Hong Kong ETF market continue to internationalize, with Saudi Arabia becoming a highlight. Following the listing of the first and largest Saudi Arabia ETF in the Asia Pacific region on HKEX in November 2023, two ETFs tracking Hong Kong stocks were listed in Saudi Arabia in October this year, quickly becoming one of the top three ETFs traded in that market, reflecting the local demand for investment in the Hong Kong market and potentially providing additional sources of funding for the Hong Kong ETF market.