Goldman Sachs: Purchasing headquarters property in Hong Kong stock exchange can strengthen brand image, target price of 378 Hong Kong dollars.

Goldman Sachs released a research report stating that the Hong Kong Exchanges and Clearing Limited (HKEX) announced the acquisition of the Central Exchange Square property to be used as its permanent headquarters. According to the terms of the transaction agreement, it is expected that HKEX will effectively convert the investment income from its external investment portfolio into a capitalization rate of 3%. It is believed that realizing external investments will help reduce the volatility of investment income. Over the past nine years, HKEX's external investment portfolio has generated an annual return rate of about 4%. In contrast, Goldman Sachs predicts that the investment return rate for the fiscal years 2026 to 2027 will range from 5% to 6%. The transaction is expected to have a negative impact of approximately 1.5% to 2% on HKEX's pre-tax profit, or a decrease in investment income of about HK$350 million, but will also save approximately HK$180 million in rent. Goldman Sachs believes that HKEX's purchase of the headquarters property will help strengthen its position as a key component of Hong Kong's financial market infrastructure and its brand image as a connection between East and West important exchanges. They have a target price of HK$378 and a "Buy" rating.