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Driving Growth through Exploring New Markets and Opening up New Frontiers
Hong Kong stocks rose 18% last year, and the positive momentum has continued into 2025. In the first half of this year, the Hang Seng Index surged by 20%, gaining over 4,000 points, marking the largest ever first half-year increase in terms of points. Stock market turnover has further expanded, and the initial public offering (IPO) market has become notably more active. 42 IPOs were completed in the first six months, raising more than HK$107 billion in total, approximately 22% higher than the entire amount raised last year, ranking Hong Kong first globally thus far. The market remains optimistic about the performance of both Hong Kong equities and the IPO market for the second half of the year. In fact, IPO applications in Hong Kong are rapidly increasing. So far, around 200 applications have been received, doubling the number at the beginning of this year. The applications include those by companies from the Middle East and Southeast Asia. This not only reflects the growing attractiveness of the Hong Kong market amid its rally, where more companies have been encouraged to accelerate their listing plans; it also demonstrates the effectiveness of our recent promotional efforts both in Hong Kong and on the Mainland, as well as internationally.
A closer look at the trading data of Hong Kong stocks reveals that innovation has driven growth and fostered better development.
The recent surge in Hong Kong equities has been primarily fueled by investments in technology stocks, which, in turn, has boosted trading in related derivatives. Exchange-Traded Products (ETPs), which are linked to various asset classes, have emerged as a vital force driving product innovation and supporting market liquidity in recent years.
While the term "ETP" may not be too often heard, many are familiar with its major category — Exchange-Traded Funds (ETFs). The Tracker Fund of Hong Kong is a well-known example. Currently, ETPs listed in Hong Kong are anchored to a wide range of assets, including equities, fixed income instruments, commodities, currencies and even digital assets. These assets originate from regions such as the Mainland, the US, Europe, Japan, Korea, Southeast Asia, the Middle East and South America.
ETPs offer issuers greater flexibility in selecting underlying assets, structuring product returns and managing risk exposure. Such flexibility enables them to better capture investors’ interests and meet their hedging needs, and devise innovative products that are tailored to rapidly changing market trends. For instance, Hong Kong introduced Asia’s first batch of single-stock Leveraged & Inverse Products in March this year, tracking popular US stocks such as NVIDIA, Tesla, Coinbase and MicroStrategy. These products, which focus on daily leveraged returns, have enriched market diversity and provided more tools for short-term trading and hedging.
Currently, over 210 ETPs are listed on the Hong Kong Stock Exchange. As of May this year, these products collectively managed nearly HK$510 billion in assets, representing a 30% increase compared to 2020. Their average daily turnover has surged sixfold during the same period, reaching approximately HK$40 billion.
It is worth noting that, despite fluctuating investor sentiment in recent years, the growth momentum of Hong Kong’s ETP market has remained strong. The proportion of ETP trading relative to total market turnover has risen from less than 5% five years ago to around 17% in the first five months of this year. Clearly, continuous innovation in Hong Kong’s ETP market has stimulated growth in volume, met evolving investment needs, and injected greater vitality and liquidity into the broader market. It has effectively served as a liquidity buffer during times of volatility.
Among ETPs, ETFs are the most widely recognised products in the market. They have also seen notable new developments, such as the cross-listing of overseas ETFs in Hong Kong. In February this year, the world’s fifth-largest ETF, listed in the US with assets under management (AUM) exceeding US$300 billion, chose to cross-list in Hong Kong to broaden its investor base and trading volume. Meanwhile, Asia’s first batch of digital asset spot ETFs were listed in Hong Kong last year. Together with other structured products linked to digital assets, the total AUM of digital asset ETPs listed on the Hong Kong Stock Exchange reached HK$4.7 billion as of June this year, representing a 74% year-on-year increase.
The Hong Kong Exchanges and Clearing Limited is actively promoting the listing of more thematic ETFs, covering areas such as innovation and technology (I&T), climate change response, renewable energy and biotech. These products not only cater to investors’ interests and risk appetites but also help channel capital towards high-quality development in the real economy. Through further institutional and product innovation, we aim to better leverage global market resources and reinforce Hong Kong’s position as the premier ETP hub in the Asia-Pacific region.
We will also step up efforts to promote Hong Kong’s financial markets to overseas audiences, with a view to helping international investors better understand and appreciate Hong Kong’s strengths, development opportunities as well as prospects and potential. This week, I will visit Seoul, Korea, to engage with local fund managers, institutional investors and financial institutions. We will explain the latest developments in Hong Kong’s financial markets, including IPOs, ETPs and digital assets. In fact, the interest of Korean investors in Hong Kong’s financial markets has been on the rise. For example, their investment in Hong Kong stocks in February this year reached a near three-year high. We hope that this visit will deepen their interest in and engagement with our market.
In fact, apart from the financial markets, Hong Kong offers a favourable business environment, as affirmed by various recent international rankings and surveys. It is also an ideal platform for foreign enterprises to expand their businesses in the Guangdong-Hong Kong-Macao Greater Bay Area, Southeast Asia and beyond. This week, InvestHK will announce its strong progress in attracting investments and businesses during the first half of the year, with notable achievements in finance, I&T and family offices. In the second half of the year, we will launch more thematic promotional trips to deepen and strengthen our efforts in showcasing Hong Kong’s advantages to the world.
July 6, 2025
