Morgan Stanley: Hong Kong Exchange (00388) earns 12% more in the first quarter. Average daily trading volume and IPOs are strong. Target price is 512 Hong Kong dollars.

Morgan Stanley released a research report stating that it expects Hong Kong Exchanges and Clearing Limited's (00388) revenue and profit for the first quarter of 2026 to increase by 10% and 12% respectively compared to the same period last year. Market activity has remained strong so far this year, as evidenced by the increase in trading volume and a robust IPO pipeline. Morgan Stanley has a target price of HK$512 for Hong Kong Exchanges and Clearing Limited and a "hold" rating. The bank expects the revenue of Hong Kong Exchanges and Clearing Limited to increase by 10% in the first quarter of 2026 compared to the same period last year, mainly driven by strong daily trading volumes, although some of the increase will be offset by a decrease in net investment income. The average daily trading volume in the first quarter of 2026 reached HK$277 billion, a 14% increase from the same period last year and a 20% increase from the previous quarter. The average daily trading volume for futures and options also increased compared to the previous quarter. In the first quarter of 2026, the amount raised through IPOs reached HK$110 billion, a 489% year-on-year increase, with 40 new listed companies, a 135% year-on-year increase. The bank expects a net investment income of HK$1.065 billion in the first quarter, a decrease from the same period last year and the previous quarter, mainly due to lower interest rates compared to the same period last year and non-recurring income in the fourth quarter of 2025. It is estimated that the profit of Hong Kong Exchanges and Clearing Limited in the first quarter of 2026 will increase by 12% year-on-year, while EBITDA profit will increase by 1%.