Goldman Sachs: Raises the target price for Hong Kong Stock Exchange to HKD 544, as the market underestimates southbound trading activity.

On September 19, Jin10 reported that Goldman Sachs' research indicated that the investment income of the Hong Kong Stock Exchange (00388.HK) is expected to be about half of the first half level in the third quarter, reflecting the decline of HIBOR from May to August, the reduction of external investment portfolios, and the revision of the interest rate sharing protocol for margin funds; it is estimated that southbound trading accounts for about 30% to 40% of the year-on-year rise in overall average daily trading volume (ADT). Therefore, southbound trading and overall ADT will determine the short-term stock price trend. Accordingly, Goldman Sachs predicts that the ADT for October to December 2025 will be about HKD 260 billion and concludes that the earnings per share are close to consensus. Combined with recent trading volume trends, Goldman Sachs has raised its cash ADT and earnings per share forecasts for 2025 to 2027 by 3% to 4%, and based on a price-to-earnings ratio of 40 times for 2026 (unchanged), the 12-month target price has been raised by 4%, from HKD 524 to HKD 544, which corresponds to a predicted price-to-earnings ratio of 40 times for the fiscal year 2026; maintaining a “Buy” rating.