Hong Kong Exchanges & Clearing Ltd. Stock

Good afternoon, ladies and gentlemen. Welcome to HKEX 2026 Interim Results Analyst Presentation. We're very pleased to have with us today our Chief Executive Officer, Ms. Bonnie Y Chan; our COO, Ms. Vanessa Lau; our Group CFO, Mr. Herbert Hui; our Group CIO, Mr. Richard Leung; and our Head of Markets, Mr. Gregory Yu. Bonnie and Herbert will first give a presentation on our business highlights, strategic progress and financial results, and we will then open the floor to questions. Without further ado, over to you, please, Bonnie.

Good afternoon, everyone. Thank you for joining us today. I'm pleased to be presenting our interim results for 2026. In a few moments, Herbert Hui, our Group Chief Financial Officer, will share more details on the numbers. After that, I will discuss some of our business highlights. And finally, the team and I will be happy to take your questions.

So let's kick off with a quick overview of the results. HKEX delivered an exceptional first half of 2026, reporting the group's best ever half yearly revenue and profit. These results surpassed the previous records set in the second half of 2025. Herbert will talk through these numbers in more detail shortly. Now driven by optimism in China's outlook underpinned by exciting developments and innovation, there was renewed global investor interest in our markets. The Hong Kong cash market went from strength to strength with volumes reaching a record half yearly high.

We also saw strong performance across the Hong Kong derivatives, ETP and commodities markets. With the continued momentum we have been seeing, we are confident that the Hong Kong's markets have regained their vibrancy. Therefore, our focus is now on execution, in particular, sustaining the momentum, making our markets even more competitive, building the multi-asset ecosystem that will support Hong Kong's next phase of growth and strengthening our connectivity to the major markets and liquidity pools of the region.

Highlights of this in the first half include developments in FIC and our index business, the competitiveness of our listing framework, market infrastructure, operational and technological enhancements and increased connectivity with exchanges in Southeast Asia and Central Asia. I will discuss our core business strengths, our focus on diversification and our most important strategic initiatives in more detail shortly. But first, let me hand over to Herbert to go through the results. Over to you, Herbert.

Thank you, Bonnie. Good afternoon to you all. My name is Herbert Hui, and I'm pleased to be here to share with you highlights of our 2026 first half financial results. HKEX delivered a record financial performance in first half 2026, with revenue and profit both reaching record half yearly highs. Driven by positive market sentiment, strong interest in Chinese Mainland technology and AI-related stocks, sustained momentum in IPO activity and active participation from both international and Chinese Mainland investors, trading volume across the cash market, derivatives market and Stock Connect reached half yearly record highs in first half '26.

The group's commodities market also performed strongly with LME chargeable ADV reaching a record half yearly high. The group's revenue and other income of HKD 16.7 billion was 19% higher than first half 2025. Profit after tax was HKD 10.6 billion and EPS was HKD 8.36, both up 24% compared to the year before. The Board has declared a first interim dividend of HKD 7.43 per share, representing 90% of the group's profit attributable to shareholders, excluding the results of HKEX Foundation.

Turning to the detailed financials for the half year. Trading volumes reached record half yearly highs across all markets in first half '26. Headline ADT increased by 18% year-on-year to HKD 283 billion, and both Northbound and Southbound Stock Connect reached all-time highs with Northbound ADT more than doubled year-on-year. The derivatives and commodities market also performed strongly with trading volumes increasing by 6% and 18%, respectively, compared to first half last year. Driven by the record trading volumes, revenue and other income of the group increased by 19% compared with first half last year, reflecting higher trading and clearing fees as well as increased depository and listing fees.

The increase was partially offset by lower net investment income from margin funds, attributable to higher rebates payable to participants following the implementation of revised margin rebate arrangement starting October last year and also attributable to lower investment returns. OpEx increased by 6%, primarily due to higher staff costs, IT costs and foundation donations, partly offset by the nonrecurring FCA fine of HKD 90 million paid in '25 and an insurance claim of HKD 24 million received in '26, both relating to the previous LME nickel incident. Excluding Foundation donations FCA fine and the insurance claim, OpEx was up 9%.

Turning to next page, where we look at the Q2 '26 financials against the same period last year. Following a strong first quarter of '26, market activity accelerated further in Q2 with headline ADT reaching a record quarterly high of HKD 289 billion. Revenue and profit increased by 18% and 21%, respectively, against Q2 last year. The growth was driven by higher trading and clearing fees from increased cash derivatives and commodities market volumes, partly offset by lower net investment income from margin funds due to higher rebate payable to participants under the revised margin rebate arrangements.

Moving on to 2026 results against the historical trend line. Driven by the sustained market momentum, the financial performance in the first half of '26 is above the historical trend line. Throughout the years, HKEX continues to maintain an attractive EBITDA margin, reflecting the successful diversification of our business in recent years and our cost discipline. As we have been building and enhancing our product offerings, market microstructure and technology platform over the last few years, we were well positioned to capture the opportunities arising from this positive momentum.

Next, we take a look at our investment income. Total net investment income for first half '26 was HKD 2.56 billion, representing a decrease of 11% compared with first half last year. This included a nonrecurring valuation gain of HKD 298 million in our unlisted minority equity investments. Excluding this gain, net investment income was 21% lower than first half '25, primarily reflecting lower margin fund income due to higher rebates to participants as well as reduced investment returns, reflecting a lower interest rate environment for reinvestment. Looking ahead into second half '26, net investment income is expected to continue to be affected by the revised margin collateral arrangements, fluctuating margin fund size and movements in Hong Kong dollar interest rates.

Now let's look at our operating expenses. OpEx was up 6% in first half '26 compared with first half '25 due to the increase in staff costs and inflationary increase in other expenses, partly offset by HKD 90 million FCA fine in '25 and an insurance claim relating to nickel litigation of HKD 24 million received in '26. Excluding these nonrecurring items, OpEx was up 9%. This reflects partly the group's investment in talent to build our multi-asset ecosystem. In summary, our record first half '26 financial results reflected record market trading volumes and benefited from our past and ongoing execution of various strategic initiatives in products, market structure and systems.

With that, I will now hand back to Bonnie for our business update and outlook.

Thank you, Herbert. As we noted, the results for the first half of 2026 were strong. More importantly, they demonstrate that Hong Kong's markets have regained their vibrancy, supported by renewed investor interest, active capital formation and the continued execution of our strategy to build a broader, more competitive market ecosystem. Average daily turnover volume in the cash market saw a record half yearly high, 18% higher compared with the first half of 2025. Meanwhile, our diversification strategy continues to deliver. The strength of our equity market gives us the platform and confidence to keep building across derivatives and commodities as well as FIC, indices and data.

The Connect programs also performed well with Stock Connect, Bond Connect and Swap Connect all reaching record highs. And backed by strong investor demand and a healthy IPO pipeline, Hong Kong ranked as the second leading global IPO venue in the first half of 2026. Notably, activities spanned a diversity of sectors, including technology, biotech, new energy, EVs, consumer, mining and others. Additionally, fundraising success has not been limited to IPOs. Follow-on fundraising saw the strongest first half performance since 2021.

Now let's look a bit more closely at derivatives, commodities and the broader range of risk management tools we're developing for our markets. Average daily volumes for derivatives hit a record half yearly high. This growth was underpinned by robust trading and hedging demand amid an active market environment. There were notable increases in the trading volumes of stock options and Hang Seng TECH Index Futures and Options. The LME recorded strong growth in trading activity with chargeable average daily volumes reaching a record half yearly high. We are also continuing to broaden our commodities franchise, including in products such as USD Gold Futures, where activity has reached repeated new highs.

Another example is the Shanghai Futures Exchange LME hot-rolled coil futures settlement price licensing initiatives, which will support the planned launch of LME Steel HRC Shanghai and London later this year. With these initiatives, we're strengthening cross-border cooperation in commodities and helping international market participants access China-linked benchmarks for trading and risk management.

So now let's look at what is driving the near-term momentum in our markets. We continue to see 2 complementary engines of growth. The first is capital formation. We have worked closely with regulators and market participants to enhance the attractiveness and competitiveness of our listing platform and with partner exchanges to enhance regional connectivity to our markets. Together with sustained interest from Chinese and international issuers, this has helped build a healthy and very diverse IPO pipeline. The pipeline spans technology, biotech, health care, mining, consumer and include new economy companies, established corporates, multinational enterprises and potential homecoming listings.

We're also seeing a strong follow-on fundraising activity as listed companies continue to leverage Hong Kong as a capital raising platform. Now the second engine of growth is the strength of our secondary markets. The record results across our asset classes in the first half of the year reflect strong investor engagement from both Mainland China and international markets, supported by product innovation and the continued expansion of our market ecosystem. Take ETPs as an example. ETP contributed to 17% of headline ADT in the first half. Just 5 years ago, in 2021, they were only contributing to about 5%. Importantly, the 2 engines powering our momentum, capital formation and secondary market that is, are mutually reinforcing. A vibrant secondary market attracts issuer, while a strong pipeline of quality companies support trading activity. Just to underscore that point, the companies that listed with us since 2025 contributed to more than 8% of the record headline ADT of the first half of this year.

We are also making strategic progress in advancing Hong Kong's FIC and commodities ecosystem. This is an important part of our multi-asset strategy. It is about giving investors more ways to access China, deploy capital and manage risk through Hong Kong. Our most significant milestone in the first few months was the launch of 5-year government bond futures, the only China government bond futures contract available in the offshore market. Another highlight is the revitalization of our USD Gold Futures contract. This has driven a strong recovery in activity with both trading volume and open interest reaching record highs.

Strong market participation supported by tighter bid-ask spreads has come from a diverse range of users. This reflects growing demand for diversified risk management tools across both short-term trading and long-term investment strategies. In our OTC clearing business, we announced plans to launch FDR007 contracts later this year, subject to regulatory approval. This would expand our suite of RMB risk management products. We are also advancing longer-term strategic initiatives, including our collaboration with CFETS on a next-generation fixed income trading platform and assets to support the development of Hong Kong's repo market infrastructure.

While last year was about setting our direction for FIC and commodities development, this year has been about delivering step-by-step across products, platforms and partnerships. At the same time, we're continuing to modernize our market structure and our operational platforms from T+1 and USM to ODP, OCP, digital payment adoption, board lot enhancements, option strike price enhancements and derivative markets after trading -- after hours trading. Global capital allocation patterns are changing as investors seek more diversified growth and risk management opportunities. We are committed to making it as easy as possible for them to keep finding those opportunities here.

At our core, we are market infrastructure, and our role is to keep improving how our markets operate and how participants experience them. So to conclude, HKEX delivered a strong first half with record results across our market and continued progress on our strategic priorities. The market has regained its vibrancy and our focus now is on sustaining that momentum through disciplined execution. Over the past decade, the Connect programs have transformed Hong Kong's role in the global financial system, creating unprecedented links between China and international capital. We believe the next decade of connectivity presents an even greater opportunity. As investors seek broader access to opportunities across Asia, they will also require deeper liquidity, more diverse products and increasingly sophisticated risk management tools.

Meeting these needs will be the next driver of capital market growth. That is why we are focused on building a vibrant multi-asset ecosystem with equities as the core, but also spanning fixed income, currency, commodities, derivatives, indices and data. And we are making tangible progress on this front, new FIC products, growing commodities activity, a developing index business, stronger technology platform and practical reforms that make our markets more competitive and easier to access. Every step we take contributes to the same objective, reinforcing Hong Kong's position as the international financial center that connects the world to the best opportunities of Asia. We remain confident in Hong Kong's future, confident in the strength of our unique growth and confident that we can capture the opportunities that lie ahead. Finally, I would like to thank our Board, regulators, market participants and everyone at Team HKEX for their continued support and dedication. We're now happy to take your questions. Thank you.

Thank you, Bonnie and Herbert, for your sharing. We'll now open the floor for questions. Operator, can you please give the audience instructions on how to raise questions either via webcast or audio?

[Operator Instructions] Your first question comes from Richard Xu from Morgan Stanley.

First of all, congratulations on the very solid results across the board. I have 2 questions. One is, obviously, the policymakers in China is talking about opening -- further opening up the cross-border flows in the regulated channels. I think certainly, Hong Kong Stock Exchange is well positioned for that. I don't know if there's any discussions in terms of how that -- what other channels might be opened. For example, the Southbound, is that in discussion or whether there could be more ETFs included in the Southbound going forward as well or any other discussion at the moment? Second question is on the ETP. Certainly, very solid growth in the ETP. Going forward, any other initiatives, any product that could be launched included in that to drive continued further growth going forward?

Thank you, Richard, for those questions. Let me answer the first part and then for the ETP question, perhaps Greg can give you more color. Now the cross-border channels, obviously, we are very grateful that since 12 years ago, we started the Connect program. First with Stock Connect and then over the years, we've added different products, including bonds, ETFs, interest rate swaps. And the journey, obviously, there is still a long way to go in terms of how we can augment it.

And you might have picked up the news this morning. I was in Beijing yesterday at the NFRA, and I was very happy that I was able to deliver the good progress in the sense that there was a policy announcement yesterday that insurance company on the Chinese Mainland will be allowed to invest in the ETPs listed in Hong Kong through the Connect franchise. We believe that, that's a very major positive development. And one example really of how we continue to work on various ways to augment the Connect franchise.

Another thing that I can point to is you might recall that at the beginning of the month on the 3rd of August, the Chairman of the CSRC, Wu Qing, came to Hong Kong to celebrate the launch of our Chinese government bond futures. And in his speech, he did mention a couple of things which are in flight including REIT Connect as well as including the Southbound RMB counter, both of which we are making good progress on. I think it's a matter of time that we hopefully will be able to announce to the market the actual rollout dates. But suffice to say that it has always -- we're continuously and work on 3 aspects of developing further the Connect franchise, which is I call that the [Foreign Language], right, people participants rather participants, products and platform. So first of all, bringing more participants. So I think the insurance companies coming into Southbound investment in ETF is a good example of including more players.

Products. And I think later when Greg gives you the answer on ETP's development, we obviously are very -- putting a lot of efforts into developing the 60-40 ETFs, which will be eligible for Southbound investments. And then on the platform side, we are conscious that between the Hong Kong market and the Mainland market, there are still a lot of areas we can further improve and in mind like trading -- the trading calendar, for example, is an example of that. And we will continue to do so. So hold your breath. We will be announcing many more initiatives as and when we are ready. But maybe Greg can help answer the question on what we should expect to see in terms of development in the ETP side.

Okay. Yes. So specifically on the ETF side, we've seen a strong growth in terms of the ADT over the first half of the year. It's up more than 17%. And particularly, we see strong growth with retail participation. Obviously, I think a lot of attention towards the L&I, so leverage and inverse products development. And we expect that, that side of the products will continue to grow. And you have probably heard that the SFC side have announced that the Hong Kong underlying with certain criteria are also eligible for the development of the leverage and inverse products.

And then on top of that, you may also see that the covered call ETF performance have also been strong in terms of AUM growth. So I think that is also an indication that the innovation continues to drive further turnover and also AUM development. What Bonnie mentioned with regards to the 60-40 ETFs, which is more tailored to the Southbound investments, I think you would have seen the development on our index side, where we have partnered up with KRX on the development of the semiconductor 60-40 index, where 60% is Hong Kong stocks and then 40% is the Korean stocks, focusing on the semiconductor theme. Similarly, we've partnered up with Bursa Malaysia, which we have done a 60-40 on the overall large cap theme. and various other 60-40 indices.

So these are the ones that will drive growth for Southbound investments, not only for retail, but now also with yesterday's announcement where down the road, there will be more specific details in terms of the implementation. We will expect that insurance company will also through the Southbound Connect to invest into these ETFs. So this will be a mixture of the ETF side of the development as well as our own index development catering to these type of tailored or customized underlying. Further to that, we will be looking to develop sector indices, which will again drive ETF growth in terms of the innovation towards the products and attract further investments into the thematics.

But I also want to highlight one other ETF item that we will be looking to grow, which is the fixed income side of the ETF as the FIC market and have a good kickoff with the CGB futures, so China government bond futures as well as our revitalization of the gold futures. We have seen a lot of institutional investors very interested in both our commodities as well as our fixed income market. And so fixed income ETF naturally is a further development, which we will expect also good uptick from our institutional investor participants.

Thank you, Bonnie and Greg for sharing.

Your next question comes from Charles Zhou from UBS.

First of all, congratulations on a very solid set of results. I believe investors are also very happy with the core business, especially on the equity side. So maybe I'm going to ask a question on your index or maybe just about the 5-year CGB futures. We noticed that in early August, Hong Kong Stock Exchange launched its first year CGB, China government bond futures contract, which I believe is a landmark product. So could you please maybe discuss about the longer-term growth potential of this contract and also the role it could play within the China fixed income derivatives market as well as the FIC ecosystem?

Thank you, Charles, for the question. I would say that, first of all, this piece, the 5-year CGB futures is a very exciting first step in our overall FIC strategy. We only launched it on the 3rd of August, but suffice to say that early signs are very encouraging. So I'll pass it on to Greg to maybe, first of all, give you some color as to how the momentum is building up, but more importantly, how this fit into our broader FIC strategy and more on the narrower side, what else to expect in that suite of futures products. So Greg?

Yes. So I think we have certainly a lot of attention from various different types of global institutional investors towards this product. So in terms of the engagement, we're seeing across the board, global asset managers and large asset owners who are very interested in trading this. In fact, we have seen over the course of just the past 2 weeks, almost every single day, there is a new participant placing orders to test it out. So that's actually a very strong indication that everybody is very strong interest in this. Now this is only one contract, one tenor. Of course, it's not sufficient to say this sufficient to cover basically all sets of tenor and duration. But of course, down the road, we would be hoping to launch other tenors as well.

So to specifically highlight what does this do towards our fixed income market overall. Basically, it's a price discovery tool on the offshore side, allowing now offshore investors to participate in the price discovery of our offshore CNH curve. With that as being a foundation of the curve, we will be able to then attract more investors to issue debt in the CNH terms in different tenors. That in itself is a prerequisite to build a vibrant fixed income market naturally. And with the institutional investors already participating in the futures, we would expect that when the cash bond market also further grow, the secondary market trading will also further increase.

I also want to highlight that recently, we -- I mean, I think over the course of last year or 2 years, the Dim Sum bond market has already grown significantly. And there has been more and more listings of the Dim Sum bond market -- Dim Sum bonds in Hong Kong Exchange. And as we build out all the other various different instruments on -- especially, let's say, on the trading platform and so forth, we are definitely pushing more towards liquidity into the fixed income market, coupled with our OTC clearing efforts as well. So I think overall, right, the development of the fixed income step by step is there. We're getting a lot of attention from global investors, but this is basically the first very small step, if you will, that is -- but at the same time, it is a very significant milestone.

I would supplement by saying that you will see more activity from us in terms of the CGB ecosystem. We are going to open up our 2 biggest clearing houses, futures and options clearing houses to accept CGB as collateral. This is going to happen before the end of the year. That will give a very good reason for investors to hold the paper to hold CGB, place it as collateral. And we're also exploring the -- how we build a vibrant repo market. So all of that to come, of course, one step at a time, subject to regulatory approval.

We will take our next question. Your question comes from the line of Gary Lam from HSBC.

Two questions, if I may. Firstly, I know that the Northbound ADT and the Northbound contribution to revenue improved very significantly in the first half. Can we better understand from management perspective, the underlying drivers? I think through Hong Kong Exchange Northbound as a percentage of A-share market turnover, over time, that has also improved as well. Are there some work that the exchange has been doing or some sort of further expansion potential to capture those related revenue? That's question number one.

Question number two, again, I take look at the IPO momentum has very strong. But in terms of the active application number, it fell slightly from sort of like mid-500 to high 400. Just trying to understand the underlying reasons. Are there some maybe companies without sufficient quality like withdrawing the applications? Are these like being absorbed by the listing year-to-date? Or I'm not sure whether technically when there is more IPO coming through the confidential channels, will it be taken away from the sort of like known active application numbers?

Thank you, Gary. Okay. I'll answer your second question first and touch on your first one and maybe my colleagues would also chime in on the first one. So I mean, you mentioned 500 or high 400 I mean, first of all, it's conversion into real listings, right? That will take the number down because if there are applications and we manage to list them, then they're no longer counted in the application number. And you know that year-to-date, we have already completed over 100 IPOs, we should be standing at 105, I think, today. Total fundraise has already exceeded the total full year 2025. We are at USD 41 billion total fund raise compared to USD 37.5 billion for the full year last year. So there's a lot of conversion from applications into real listings.

But regardless, I think at a few hundred, it is a high number. And I would say that from my day-to-day interaction with potential listing applicants, the interest remained very strong, very, very strong. So I really do not think we should be too obsessed with sort of whether it's low 500 or high 400s. I can, on a very generalized level, assure you that the interest has not waned. All right. Your first question on Northbound. Yes, indeed, Northbound has -- ADT has improved quite significantly. Last year, you recall that the ADT for 2025 was RMB 212 billion. I think year-to-date, we are probably at RMB 340 billion. But for the last month, there weren't many trading days we saw the number at above 400. So on a very general level, I think it really basically illustrates the point that the rest of the world is more interested to trade A shares, which is a good thing, I think, on a very high level.

But if you look into it, I also feel that if you think about the A-share market over the last 12 months, the vibrancy has also returned, right? So there are many, many days when the Asia market was trading at sort of the trillions or $3 trillion even. And so that certainly -- a vibrant market certainly will drive a lot of these Northbound activity. I don't know for sure, but you also would notice that recently, there have been a few rather high-profile IPOs on the A-share market, which has yet to be included in the Connect program for Northbound trading. So with those eventually being included, I think that will provide even sort of more catalyst for -- to sustain the high level of Northbound trading. But Herbert would like to add something. Yes.

Okay. So just to supplement, the other potential reason for the almost doubling in the Northbound ADT is the number of eligible stocks expanded by about 20%. So that's probably a reason to that. And as to the market share in the A-share domestic market, I think colleagues have been working really hard to really trying to reduce frictions and increase the competitiveness of the Northbound Connect channel, and that would certainly help in raising the overall trading volume of Northbound.

We will take our next question. The question comes from Michael Zhang from Citi.

I have 2 questions, if I may. The first question is just about the impact from NASDAQ 24-hour trading. How do you think that will impact Asia hours liquidity? And how could the Hong Kong Exchange respond to that consider changing the trading hours? And then the second question, I think, is just a follow-up on the IPO market. A-share IPO has kind of normalized in recent months. How do you see the competition for IPOs between the A share and H share -- because obviously, a lot of the IPO is coming from the AH listings. Do you think the interest for AH listing remains solid at the moment?

I'll let Vanessa answer the first question, and then I'll address the question on the A&H listing. I'm sorry, the line was a little soft, but I believe you were asking about A&H listing. Okay. So Vanessa go first.

Thank you. Thank you, Michael, for your question. Extending trading hours, the way we look at it is that over time, we want to continue to improve market accessibility. That is really the key principle, not necessarily the longer hours, the better. And you have seen that we have made significant progress over the last few years, and I can mention some examples like the Synchronizing the Connect trading holidays added another 10 or so trading days each year. Of course, we have the severe weather trading. Hong Kong does have its typhoon. So in 2025, we had 7 extra trading days. And each day, it was trading over HKD 220 billion.

Now the next development is likely to be in the derivatives after hours trading. As you know, we already extended this once back in 2019 by 2 hours to currently closing at 3:00 a.m. Hong Kong time. We are looking to extend that to cover the U.S. time zone closing. Another couple of hours could make a huge difference if you look at how much -- what percentage of trading volumes happen in the closing auctions. So we will be looking at mainly derivatives extension to start with. In terms of the cash market, yes, we noticed the headlines on 24/7, 23/5 in other regions. What we look at is, is it really going to improve the market accessibility and who are we trying to attract to come to Hong Kong? And is actually -- is our market actually ready, our participants, our banks, our custodians, et cetera.

There are, of course, a number of challenges. If you keep extending, could you have like thinner liquidity, could you have bid-ask spread that's not as tight. So we need to have a lot more considerations in terms of the cash market extension of hours. We will continue to listen to market feedback, and we will tune accordingly. But I think in terms of infrastructure, we are definitely getting ourselves ready. You would have seen that with our Orion Derivatives Platform, Orion Cash Platform, we are technically ready for much longer hours. In fact, ODP brings us to technically 24-hour trading. So we don't want to fall behind on infrastructure, and we're not. We are definitely on par there. It's just the market readiness and what we think would be the most appropriate for the Hong Kong market in terms of accessibility.

All right. Then back to your question about A&H listing. So this is, I think, how I look at it. I think oftentimes, people have this impression that the H-share market, the Hong Kong market is competing with the A-share market on IPOs. So there's some sort of cannibalization, if you may. I actually look at those 2 markets as being highly, highly complementary. And why do I say that? Now if you look at the recent vintage of companies seeking a listing from the Chinese Mainland in particular, a lot of them are in areas or in sectors where -- which require a huge amount of capital expenditure to sustain the growth, right, be it semiconductor, be it robotics, be it AI, large language models, it is capital intensive. And therefore, at the top of the minds of these companies' executive, what they need is to make sure that they have access to a big shareholder base and a very deep and effective capital raising platform.

And therefore, in fact, I think if you look back into the last 2 years, it has become somewhat fashionable even for companies to seek a listing on both markets. It's more a matter of sequencing, whether they start with an A-share listing and then come to H-share. And more recently, we are seeing examples of H-share companies going back to the Mainland right? Regardless of whether it's A-to-H, H-to-A, what we see, and this has been illustrated deal after deal, whether it is CATL, whether it's most recently Innolight, having a listing on both markets really maximize that reach to investors. And more importantly, I think Hong Kong does have a strength in follow-on fundraising.

I mentioned earlier the IPO fundraise, but I would also share with you that year-to-date, our follow-on fundraising, that's listed company tapping the capital markets for fundraising, we have already reached over USD 50 billion compared to a total full year of USD 66 billion last year. So we are on good track to beat last year's record. And the more I look at this vintage of companies, I really do think that we should see -- we should expect to see a continuous trend of A&H listing.

And this, by the way, I do recall when Chairman Wu Qing of CSRC, when he came to Hong Kong on the 3rd of August to participate in one of our events. In his speech, I think he mentioned 10 different measures. The first one was about these 2-way flow, right, in terms of encouraging companies in the Mainland to continue to seek a listing in Hong Kong and also vice versa, right, for Hong Kong listed companies to go back to the Mainland. So there is some sort of regulatory reassurance there.

Last point I want to make on this topic is aside from A&H, if the worry is somehow there is cannibalization, please do note that we are also seeing good momentum in terms of attracting non-Chinese companies to list on our market. So most recently, you would be aware that we listed Merdeka, which is an Indonesian listed gold mining company. They did a secondary listing actually in the form of HDR in our market hasn't happened for a long time, but they raised USD 300 million, very successful. Their overall liquidity improved, and I think Hong Kong might even be trading at a premium to IDX. And in the pipeline, we have about 10 of these non-Chinese companies from a good mixture of different jurisdictions. So that's another way we can continue to build our very robust IPO pipeline.

Thank you, Bonnie and Vanessa. With that, this marks the end of today's session. Thank you, everyone, for joining us today. We look forward to continuing our engagement and conversations with you. Please reach out to us for any follow-up questions. Have a good evening.

Good afternoon, ladies and gentlemen. Welcome to HKEX 2025 Annual Results Analyst Presentation. Today, we are very pleased to have our Chief Executive Officer, Ms. Bonnie Y. Chan, our COO, Ms. Vanessa Lau; our Group CFO, Mr. Herbert Hui; our Group CIO, Mr. Richard Leung, and our Head of Markets, Mr. Gregory Yu. Bonnie and Herbert will first give a presentation about our business highlights, strategic progress and financial results. Then we are very happy to take some of your questions. Without further ado, over to you, Bonnie.

Good afternoon, everyone. Thank you for joining us today. I hope everyone have an enjoyable holiday season. I'm pleased to be presenting HKEX's annual results for 2025, in which I'm joined by a few members of our senior management team.

Now I will start things off with a quick overview of the highlights. Then our Group Chief Financial Officer, Herbert Hui, will share more details on our financial performance. After that, I will return to talk about what is on the horizon from a strategic perspective. So let's begin.

HKEX delivered record results in 2025, reporting the group's best ever revenue and other income and best ever profits for the second consecutive year. Herbert will go into these numbers in more details in a few moments. The very decisive return of issuers and investors last year rebuild confidence in Hong Kong's markets and unlocked liquidity. This enabled us to accelerate our strategic initiatives.

For Listing, we introduced new IPO price discovery rules that enable a more flexible, transparent and fit-for-purpose pricing and allocation framework, and we continued to increase support for specialist technology issuers. In the Securities market, we implemented the first phase of minimum spreads reduction, which very quickly began to demonstrate market efficiency enhancements. In the Derivatives market, we launched the [ Hang-Seng ] Biotech Index Futures, complementing our existing suite of biotech-related offerings and flagship equity index derivatives. In 2025, we broke new ground in the development of Hong Kong's fixed income and currency ecosystem. Our agreement to acquire a 20% stake in CMU OmniClear will strengthen Hong Kong's position as the global hub for bond fundraising, risk management and offshore RMB business. This lays the foundation for a vibrant FIC marketplace that mirrors the depth and liquidity of the equities markets.

In Commodities, the LME approval of warehouses in Hong Kong now expanding to a total of 15, is an important milestone signaling the city's potential to becoming a global commodities trading hub. And we expanded our Index business with the launch of the HKEX TECH 100 Index, our first equity index focused exclusively on Hong Kong's technology sector. In addition to these initiatives, we also invested in establishing our permanent headquarters here in Exchange Square, highlighting our confidence in and commitment to Hong Kong's continued development as an international financial center. These are just some of the highlights of the strategic initiatives we implemented last year. But you can get a sense that in addition to the momentum of our markets, 2025 was also a year of progress driven by reforms and strategic investments.

Now I will return in a few moments to talk about how we are setting our journey ahead. First, let me hand over to Herbert to go over the HKEX Group financial review. Over to you, Herbert.

Thank you, Bonnie. Good afternoon, and happy New Year. I'm pleased to be here to share with you our 2025 full year financial results. HKEX delivered a record financial performance in 2025 with revenue and profit both posting record highs for the second consecutive year, driven by increasing international investors seeking diversification and opportunities in China-related assets, together with the greater participation from Mainland China investors, trading volumes in Hong Kong cash and derivatives markets reached record highs. The group's commodities market also performed strongly with LME chargeable ADV reaching a new record high, surpassing the previous record set more than a decade ago.

Revenue and other income of $29.2 billion was 30% higher than 2024. Profit after tax was $17.8 billion and EPS was $14.05, both up 36% compared with the year before. The Board has declared a second interim dividend of $6.52 per share, representing 90% of the group's profit attributable to shareholders, excluding the results of HKEX Foundation. Together with the first interim dividend of $6 per share, the 2025 full year dividend is $12.52, up 35% against 2024.

Turning to the detailed financials of the year. Trading volumes reached record highs across all markets in 2025. Headline ADT of $249.8 billion was 90% higher than the year before. And both Northbound and Southbound Stock Connect saw all-time highs. Derivatives and commodities market also performed strongly with trading volumes increasing by 7% and 8%, respectively, compared with 2024. Revenue and other income was 30% higher than 2024, driven by higher trading and clearing fees from increased volumes, higher depository fees and listing fees.

OpEx was up by 5%, mainly due to the nonrecurring FCA fine of $90 million paid in '25 and recovery of legal fees of $60 million in '24, both relating to the LME nickel incident. This cost growth is below our historic cost growth trend line. The group's effective tax rate increased to 15.7% in 2025 as compared to 11.4% in 2024 due to the provision of top-up tax under BAPS 2.0 taking effect January last year.

Turning to the next page, where we look at the fourth quarter 2025 financials against the same period last year. Revenue and profit were both up 15%, driven by increased Trading and Clearing fees from higher Cash market and commodities market volumes and increase in Depository fees and Listing fees, partially offset by lower net investment income from margin funds due to higher rebates payable to participants following the implementation of revised margin rebate arrangement in the fourth quarter of last year.

Moving on to the 2025 results against the historical trend line, driven by the positive market momentum since fourth quarter 2024. 2025 performance is above the historical trend line. Throughout the years, HKEX continues to maintain an attractive EBITDA margin, reflecting the successful diversification of our business in recent years and our cost discipline. As we have been building and enhancing our product offerings, market micro structure and technology platform over the last few years, we were well positioned to capture the opportunities arising from this positive momentum.

Next, we take a look at our investment income. Total net investment income of internally managed funds in 2025 was 8% higher than 2024, primarily driven by the increase in margin fund size as a result of higher margin requirements and higher open positions for stock options and the nonrecurring fair value gains on our unlisted equity investment, partly offset by lower investment returns and higher rebates to participants. The external portfolio was fully redeemed in May '25 to fund the acquisition of HKEX headquarters here with the proceeds returning to us after the applicable lockup periods. As at 31st December '25, we have already recovered over 80% of the funds.

Now let's look at our operating expenses. OpEx was up 5% in '25 compared with the year before due to a $90 million FCA fine and the recovery of LME nickel legal fees, $60 million in 2024. Excluding these items and the charitable donations, OpEx was up 2% due to high staff costs from payroll adjustments as well as higher IT costs from inflationary increases.

In summary, the 2025 financial results were characterized by record trading volumes, disciplined cost management and successful execution of our strategy. Looking ahead to 2026, we started the year strongly, both in terms of turnover and IPO pipeline. However, net investment income is expected to be affected by our revised margin collateral arrangements that's going to have the full year impact, Hong Kong dollar rate movement and redemptions from our external portfolio. Our strong financial performance and solid financial position have positioned us well to invest in the future, and we will continue to enhance and expand our multi-asset ecosystem to support the long-term development of Hong Kong's capital markets.

With that, I will now hand back to Bonnie for our business update and outlook.

Thank you, Herbert. Now when we look at the broader landscape ahead of us, we expect to maintain and even accelerate the pace of strategic progress of the last year. In 2025, we held the top global position for IPO fundraising, and we are starting 2026 with a robust pipeline of quality companies from a diversity of high-growth sectors from AI, robotics and new energy to health care and consumer. Years of continuous enhancements to our Listing framework put us in an unrivaled position to capture emerging trends such as the pace of development and innovation sectors, especially in the Chinese Mainland.

At the same time, follow-on issuance in 2025 totaled more than HKD 500 billion, including 2 of the top -- the world's top 5 ECM transactions, demonstrating the deep liquidity here. And in 2025, the secondary market remained very vibrant, fueled by renewed global interest in Hong Kong equities, rising demand for short-dated options and ongoing micro structure enhancements. Headline ADT saw a 90% year-on-year increase. The ADV of the derivatives market was up 7%, while the ADT of the exchange-traded products market nearly doubled from a year earlier.

So stepping back a little bit, what is behind this momentum, which we have been seeing since late 2024 and continue to see into 2026. Perhaps let's zoom out a bit and quickly look at the macro landscape. And there, we see two major forces at play. The first is a broad trend of global capital diversification. We are living in a time of persistent uncertainty and global investors are starting to react to this in a very predictable way. That is they have begun seeking out diversified growth opportunities. This is pushing capital into Asia.

Then there is a second force, pooling capital into our markets, and that is being driven by the evolution of China's development model. The country's greater focus on technology innovation was most dramatically demonstrated by the DeepSeek moment earlier in 2025. Following that, at HKEX, we welcomed a wave of companies that are pushing the frontiers of global innovation. We're also seeing the emergence of Chinese Mainland multinational companies that are expanding internationally. Almost half of the companies we welcome to our markets in 2025 were Mainland businesses with over 50% revenue coming from international business. And these and other companies attracted a broad and diverse representation of cornerstone investors, including from North America, Europe, the Middle East and other Asian markets.

Okay. So with these structural changes increasing the attractiveness of our market, what are we going to do next? Well, in the last decade, since the launch of Swap Connect, our efforts were focused on developing capital market connectivity to the Chinese Mainland. We developed a highly comprehensive product ecosystem around our cash equities market. This was supported by our equity derivatives franchise. And that attracted global liquidity, diversity and vibrancy to our markets. Going forward, we will continue to reinforce this unique connectivity to the Chinese Mainland. This is our greatest advantage as a global exchange.

But the next decade will also be about strengthening the connectivity between the markets of the Chinese Mainland and other Asian economies, connecting the region's capital to its biggest opportunities and then connecting global investors to an even bigger regional pool of liquidity and growth potential. More specifically, with the growing appetite for China assets, we see an opportunity to expand what we offer. Now what we've heard from investors is that they want more tools to tap into Asia and China. And as I touched on a moment ago, in the last decade, we have developed a comprehensive product ecosystem built around our cash equities, and we have continuously developed this ecosystem in step with the evolving needs of global investors. But now the investors are looking beyond equities and so are we.

Of course, we will continue to play to our strength as the cash market of choice in the region. Now in 2025, we further increased our connectivity with markets in the Middle East and Southeast Asia, adding to our growing network of partnership with stock exchanges as well as welcoming IPO listings from both regions and establishing our new office in the Middle East. Looking ahead, we will be leveraging this connectivity to creating a regional liquidity pool with a powerful global gravitational pool. We will also be exploring products that are tailored for clients in Asia and especially the growing retail class of investors here. In the last year, especially in the Southbound channel of Stock Connect, we've seen very vibrant activity from retail investors in this region, and yet there is still vast growth potential there.

ETPs are another area of the cash market with strong potential. We introduced 48 new ETP listings in 2025, including several market-first innovations. We will continue to expand and innovate our ETP product suite, cementing Hong Kong's position as Asia's leading ETP ecosystem. But looking beyond cash equities, we will also be making long-term investments in other asset classes as we enhance a multi-asset ecosystem. This will provide a diverse range of global investors with all the tools they need to invest, trade and manage risk in Asia. We have already broken new grounds in the fixed income space with our investment in CMU OmniClear. Through our partnership with HKMA, we will accelerate the development of Hong Kong's post-trade securities infrastructure into a major central securities depository in the region.

Specifically, this will include the continued commercialization of CMU and the pursuit of business development initiatives in areas such as the expansion of its investor CSD services, asset classes coverage and collateral management services.

Commodities. That is another asset class with great potential. I have already mentioned the approval of LMU warehouses in Hong Kong, which is an important milestone in the physical market connectivity. As the complexity of the macro environment continues to drive a trend of capital diversification, there will also be demand for products such as for gold futures, for example, that gives investors broader accessibility to commodities. We will also continue to enhance the tools investors need to manage risk in the region, and we will be enhancing these tools across asset classes, most notably in our derivatives ecosystem.

In Derivatives, we will continue to build on our success in product expansion, such as by growing our portfolio of monthly and weekly single stock options and by developing derivatives that reflect the innovative companies that continue to list on our markets. And running through all our asset classes will be our investment in adjacent capabilities, including the Data and Index business. A highlight of this in 2025 was the launch of the HKEX TECH 100 Index, our first equity index focused exclusively on Hong Kong's technology sector. These investments in adjacent capabilities will support our core business by driving capital flows and liquidity. But it's not just about products. We also must ensure that our markets are as accessible as possible, if we want to fully capture the opportunity of global capital diversification.

Over the years, our investment in technology and market reform have helped us generate the liquidity that has been attracting high-quality issuers and investors to our markets. Earlier, I highlighted some of the strategic market structure enhancement initiatives we introduced in 2025. We will continue to future-proof our technology and operations in the years ahead to meet the greater demand for China assets and to optimize the conditions for cooperation with our market infrastructure partners in the region, from leading market-wide discussion on finding a suitable settlement cycle for Hong Kong to removing manual and paper-based processes and from delivering on the modernization of our derivatives platform to adopting emerging technologies such as AI in our operations.

So wrapping up, 2025 was a year of strong momentum, progress and transformation. We had record results. We led the world in IPO fundraising, and we had record volumes in our markets. It was also a year in which we have made strong progress in delivering strategic initiatives. Looking at the macro landscape, while we see a lot of uncertainty, we also see great opportunities that we are well positioned to capture. As we move forward into 2026, we will be focusing on enhancing our multi-asset ecosystem, doubling down on the strength of our equities markets while developing other asset classes. And we will be looking at ways to make it as frictionless as possible to invest, trade and manage risk in our markets.

We are confident that our efforts and investments in recent years will ensure our business remains competitive in this global landscape and will support Hong Kong in its role as a global IFC, facilitating capital flows in Asia, and in China and in Asia more broadly and between this region and the rest of the world. Thank you very much for listening. My team and I are now very happy to take your questions.

Thank you, Bonnie and Herbert, for your sharing. We'll now take some of your questions. In fact, already some questions are waiting. But operator, could you please give the audience the instruction how to raise questions either via webcast or audio?

[Operator Instructions] We will take our first question. The question comes from Richard Xu from Morgan Stanley.

Congratulations on the very strong results. I got two questions. One is, Bonnie, you mentioned there's also potential expansion of connectivities with the rest of the regions like Malaysia and others. Could you elaborate a little bit on that? What are the initiatives and how we can connect more closely with the rest of the regions? Certainly, we're seeing capital inflows to that region in general.

Secondly is on cost. There are a lot of initiatives. I have seen very good cost discipline in the past few years. But with all of these increasing initiatives, does it mean the cost will need to grow with the revenue in line with the revenue a little bit more or there's more investments in people, technology, including like AI, right? I mean there's a lot of initiatives there. I guess two questions for me.

Thank you, Richard. So first of all, your first question, the rest of the region. So first of all, why are we aspiring to do this, is really because we see an increase in demand. If you think -- well, just to throw some figures, January this year, I've been reading some statistics.

Broadly in Asia Pacific, if you look at the equities markets, about 75% of the trading volume actually can be attributable to the Mainland Chinese and the Hong Kong market, 75% of the total APAC liquidity, if you may. That's a huge figure. And that gives us a belief that there is actually a lot of appetite from the rest of the region to connect with the opportunities in both the Hong Kong market as well as the Chinese Mainland market. And of course, you know that we have built the infrastructure already, which is our franchise Stock Connect program, and it's not just stock. It covers more asset classes. So we really want to take advantage of this momentum. And through, I think, a few things.

On the issuer side, you're aware that we are already doing -- or we have already been approached with more opportunities to do dual listings and join hands with other exchanges to support fundraising needs of Asian-based issuers. Last year, for example, we saw companies from Thailand, from Indonesia and even further away from Kazakhstan doing -- in the case of the Kazakhstan company doing a dual listing between us and Astana. That's on the issuer side.

On the investor side, there is a very strong desire to build more connectivity, and I'll ask Greg to elaborate on that. That could be through jointly exploring cross-listing, et cetera, but I'll let him supplement on that.

Now in terms of cost discipline, I think we have to responsibly follow good cost discipline. I mean that is just, I think, a good habit of doing business. But that doesn't mean we do not invest for the future. As I mentioned in my presentation, we see very good momentum and the macro backdrop is very positive. There is a strong desire to make use of our market and to really diversify and that does not confined to the equities market, which historically is our core business. And therefore, since we believe that this trend and this momentum will continue, I think it is important for us to make the necessary and thoughtful investment into other areas, be it fixed income, be it currency, be it commodities because our belief is that this desire from global investors to continue to diversify is not going to abate in any time soon, right?

So while we will continue to maintain good cost discipline, -- we will, at the same time, be very thoughtful about where and how we make investments where we think it is going to yield us the best opportunity set. But let me pass over to Greg to talk about the regional aspirations we have.

Thanks, Bonnie. And so I think, first of all, right, the importance of bonding it together with other regional exchanges, the main reason is you see that global investors are diversifying, right? And when they diversify, when they come to Asia, they're looking for various different assets. And if you want to keep their capital and investments in Asia, you need more assets and a wider base. So by bonding it together with other regional exchanges and products and so forth, it would basically help us to grow a bigger ecosystem.

So a few things, I mean, I already mentioned, for example, like dual listing and so forth, it will help to create further liquidity into our equities markets as well as our peer market equity liquidity. On top of that, what we will build and what we are linking up on our Derivatives products. So what we will look into our offering in both sides, products that are referencing other exchanges exposures or others would offer our exposures in DR form and so forth.

On top of that, obviously, ETF is an important instrument these days for investors. And one thing that is key for us is facilitating two-way flow. I mean, historically, we've been facilitating quite a lot of global investors going into Chinese Mainland through the Northbound Connect. And we see a strong growth in the Southbound Connect side as well. And with the ETF Connect program now expanding into -- allowing what we call 60-40 allocation, 60% allocation in Hong Kong stocks, or connect stocks, while 40% could be foreign equity exposures. That gives us more opportunity to build products around that and allowing Chinese Mainland investors to enjoy offshore exposures. So all of these type of activities and activities and product offering effectively allow us to build stronger liquidity around the region and keep the liquidity in Asia.

The question comes from Gary Lam from HSBC.

Thank you, Bonnie, and Herbert. I appreciate the presentation, particularly on the strategy side. The first question is related to the multi-asset diversification, particularly on the CMU OmniClear. Now if we factor in like a 3-year forecast in our model, to what extent should we start to think about the revenue contribution from here? How do you think about it in the way that you deploy sort of costs and investments? Should we make reference to like globally leading central securities depository, which are generating like over EUR 1 billion of profit every year or it basically should take longer, noting, of course, the participation right now is about 20% [indiscernible].

The second question perhaps is more on the global exchange competitive landscape, noting that not only Hong Kong Exchange, global exchange leading ones indeed have underperformed their domestic market. I think part of the sort of market where we has been both on the threat coming from digital access or maybe to data -- market-related data fees. So in Hong Kong Exchange sort of context, where do you think are the sort of like key area of defense reason as to why our business model can hardly be disrupted from those developments?

Thank you. Let me maybe start with the first question, and I will let Vanessa elaborate on it. The investment into CMU OmniClear, I think it's just one step in the overall strategic -- but a very important strategic step, in our overall FIC strategy. Now the initial investment is not a tremendous sum of money. For the 20% stake, we paid HKD 455 million.

But the potential, which Vanessa will explain, it's quite a big one and also will tie in with other things, other ideas that we have in the FIC space. So while I think your question is quite specific in terms of asking for sort of when we're going to see return, et cetera, I would perhaps say that this will be a longer-term investment, but potentially going to yield a rather attractive return.

Now before I hand over to Vanessa, maybe to your second question about generally sort of how exchanges around the world have been performing. And I guess you asked specifically threats from other sort of newer emerging exchanges such as those focusing on digital or virtual assets. I feel that, first of all, we are in a more advantageous position compared to some of our peers. Now if you think about the -- simply on the primary market side, right, we were #1 fundraising platform last year. We have a very solid pipeline of over 400 IPOs. I mentioned earlier that the desire from investors around the world to increase the exposure to China assets is increasing, and I'm not seeing it abating in any short term. And therefore, given that we have the Connect franchise, which is our unique selling point, I think that does set us apart from the other more traditional equities exchanges in the world. And that's something that we're very grateful about.

Now certainly, there are other asset classes such as what you suggested, virtual assets or digital assets. That's a totally different playground altogether. I think for now, we want to focus on what we believe we are most -- or we are the best positioned to do, starting with Equities, Derivatives into fixed income commodities, which, of course, we already have had a very important asset in the form of LME and really focus on developing those instead of trying to sort of cover all grounds. I think that's how we will probably sort of compete the best, and we will stick to that as the guiding principle in terms of setting out our future strategic imperatives. But perhaps on that note, let me pass over to Vanessa to give you a little bit more about our thinking around, first of all, the CMU investment, but more broadly, where we are headed on our FICC journey.

Thank you, Bonnie. Thanks, Gary, for your question. If I answer very specifically on CMU, it's a 20% equity accounting treatment. And in the scheme of things, it will be -- the contribution to our group results will be financially not so material given the size of it in the coming years.

But what -- the way we should be thinking about it, both strategically and financially over the coming years is in terms of this whole FIC ecosystem that Bonnie has been describing. So Gary, you know our business pretty well. So the way to look at it is, the pieces that we already have, the strategic pieces that we invested in, in the last numbers of years, like Bond Connect, like Swap Connect, like OTC Clear and products such as Interest Rate Swaps and Cross-currency Swaps, and I could go on. Each of these is an important part of the puzzle that we're trying to pull together into an FIC ecosystem.

In the past, admittedly, it was more like having a few products to try out and then having a few partnerships. But now the way we look at it in the coming years is the whole FIC ecosystem. And what I mean by that is starting from bond issuance and bond marketing to trading to the repo market and having a yield curve and then to clearing and settlement, depository and custodian services. Now comparing what I just said, this ecosystem to what we currently have, we have some good pieces. And the latest addition to the family is CMU. So our 20% strategic stake is indeed very important because without that, then we wouldn't have our piece of the puzzle in terms of depository and custodian services, which is critical to Hong Kong having a comprehensive and competitive ecosystem. And without CMU, we would never be able to develop in Hong Kong the ICSD or the CSD that we currently are working on.

And in terms of CMU itself, it's also gone through its own growth journey, and it is not insignificant. So right now, assets under custody has already reached HKD 5 trillion, clearly boosted by the huge acceleration in CGB issuances, China government bonds, but there are also corporate bonds that are starting also to be deposited into CMU. So this partnership with the HKMA and supported by our regulator, the SFC, totally aligned with the road map that the two regulators published for FIC in September last year. You can just see how, in a way, the stars are aligning. All parties are working together towards building this ecosystem, not just for HKEX strategy, but more importantly, for Hong Kong as the FIC and the ICSD center in the coming years. So this is how we think about it.

So when I think about the next 3 years, the next 5 years, think about the whole ecosystem of FIC. We have some pieces. We have some smaller pieces that we're bolting on now, but hugely strategic and something very significant for Hong Kong.

Thank you, Bonnie and Vanessa, for the very comprehensive response. Next question is coming from Harsh Modi from JPMorgan. I'll just read it here. There are actually three questions from Harsh from quite different perspective. Question number one, are you looking at the prediction market launch or investment? If so, what will be the regulatory and operational considerations around the market innovation? Question number two, how do you rate the probability of IPO pipeline converting in cost of this year? Question number three, could you please just share the time line on the Southbound renminbi counter and any key issues involved?

Thank you for the question, Harsh. I'll answer them in turn. The first question is prediction market instruments, I believe. Short answer to your question is no. We're not looking to offer that. As I mentioned earlier, we prefer to focus on building a multi-asset ecosystem, and we've already broadly mentioned that we want to replicate the success of our equities business into other areas such as fixed income, currency and commodities. So for now, that will be the focus.

Second question, IPO conversion rate. I guess that's not an easy question to answer. I don't have the crystal ball. But I do want to say that -- I mean, first of all, the pipeline looks very, very healthy. And when I say healthy, it's not just how many we have. It is really the diversity and the quality that I see. Now since the beginning of the year, we've already completed 24 IPOs raising over USD 10 billion. And you compare that with last year's figure, which was about USD 37.5 billion raised, we have essentially covered more than 25% in 6 weeks actually. But the more exciting thing is that the demand is huge. I mean, if you look at the ones which we have already completed, all of them have performed quite well in the aftermarket. I think maybe except for one which has dropped slightly, everyone has -- is staying above IPO price. And therefore, if that demand continues to stay strong, I really think that we will end up with another very solid year in terms of IPOs.

Yes. Third question is Southbound. Okay. So if you have paid attention to the budget speech that the FS, the Financial Secretary has put out yesterday, there is a mention of Southbound RMB counter. And I think the wording he used was that he will be looking to accelerate the implementation. So for now, that's what I can share. But suffice to say that, that's still being progressed. And as soon as we have news to share, we will do it ASAP.

The the question comes from the line of Thomas Wang from Goldman Sachs.

A couple of questions from me. I think first, just one is just kind of following up on a previous question on cost and expense. Quite a good number, only 2% growth once you take out fees given you're doing -- implementing all the initiatives. Just looking forward, how are you thinking about that expense CAGR looking maybe for the next 3 to 5 years? Are we looking at maybe kind of mid-single-digit number or something that could be even higher than that?

And secondly, as Bonnie mentioned on the initiative that talked about yesterday at the budget meeting, I think I'm not -- one thing mentioned is the expedite launch of Chinese government bond futures in Hong Kong. Just wondering how important is this in your sort of setup? And do you have any visibility on that?

Thank you for your question, Thomas. Perhaps on your first question about, I'll let Herbert answer. But your second question, sorry, the line wasn't very clear, but I heard that you were referring to the budget speech, and there was also a mention of the T-bond futures, which is in the works.

And I think that was mentioned together actually with the [indiscernible] RMB Council. Suffice to say that, obviously, this is something we understand the market has a strong demand for. We have been in close discussion with our Chinese Mainland partners and work is very advanced. So as soon as we are in a position to announce further, we will let you know. But Herbert, would you like to answer the question on cost?

Okay. So on OpEx growth, so the headline number is 5% growth. If you were to adjust for the nickel-related costs in terms of FCA payments as well as the recovery of legal fees, it went down to 2%, as you just quoted. Now -- so when I step back and look at the numbers and I was thinking -- so if you were really to do an apple-to-apple comparison, and there are certain like nonrecurring items also in the OpEx, if I were to take them out, such as the early investing or early vesting of the LTIs of staff.

Moving those nonrecurring items aside or one-off items in nature aside, we are still looking at about 5% growth for 2025. So back to the headline number. I think this is a good number, reflecting good cost discipline in terms of how we control staff costs. I think we have a very stringent process in controlling headcount and it will require top executives to sign off on all the headcount increases. So for 2025, we are looking at a headcount number that's pretty much flattish in numbers. So that's the OpEx situation we're looking at.

Historically, I think for the past 10 years, the CAGR in OpEx is something around 7%. I think last year, we are doing well at 5%. Going forward, I think you heard a lot of initiatives that Bonnie mentioned and Greg and Vanessa mentioned. So we will have to invest into the future. So that's something that we also have to look after, not just on the side of pure cost discipline.

Your next question comes from the line of Betty Li from Jefferies.

Congrats on the strong set of results. So my question regarding the IPO pipeline. I understand also referring to the budget plan 2026 to '27. I understand there might be a revision of the IPO listing rules coming up. So I just wonder if there's any further color for us to share?

Yes. Thank you, Betty. The question is what to expect in terms of the work that we are doing to enhance our IPO framework.

Actually, the way that we are thinking about it, multifold, but you can broadly put that under the umbrella of increasing competitiveness. That's what we have actually signaled to the market that we are going to do. You would also have found some reference to that in the budget speech from the Financial Secretary yesterday. So first of all, I think in terms of eligibility requirements, we did see that over the last few years, as a result of some of the reforms that we've done, for example, the introduction of Chapter 18A on biotechnology companies listing, 18C on specialist technology listings, that has brought a lot of very positive results to both the number of IPOs and fundraising on our platform as well as these successful IPOs will bring additional liquidity into the secondary markets.

More importantly, we are doing all these new chapters in response to demand from issuers and investors. They are looking for more bespoke chapters. And therefore, I would share with you that we will continue the journey of making sure that our listing regime stay fit for purpose. Another category, which was sort of previewed by the FS yesterday was potentially revisiting the WVR regime with and voting rights, which was a chapter we introduced to the market back in 2018. Now that was 8 years ago. And we are mindful that the market has moved on and maybe there could be some room for revisiting our rules and making enhancements. So those are just a couple of examples of areas that we are looking at.

The way that my listing team consider reforms is really to closely engage with the market, listen to the feedback and see where we may be able to improve our regulations. So I would say that you should be expecting to see quite a bit of action in the -- in terms of what we want to do in enhancing our listing regime. But broadly speaking, all that is with the goal of increasing our competitiveness.

Thank you very much, Bonnie. I think we have time for one last question on the line. Operator, please?

Your question comes from the line of Michael Zhang from Citi.

So my question is on the follow-up questions regarding the multi-asset business. So you're saying that you are investing to build a long-term growth around this fixed income business. And I think in the past, we've already seen launching some initiatives and also seeing very healthy growth of these initiatives. But monetization has been a question for me, and we haven't really seen a lot of revenue contribution over year. So could you -- could management share your view on the monetization opportunities of the fixed income business compared with your equities business? And how do you see the overall revenue opportunities in the long term?

And do you see -- do you have any vision, let's say, 5, 10 years later, how much of your total revenue could be contributed by this fixed income business? And you also have just made investments into OmniClear. So would you consider any additional investments or M&A to accelerate these initiatives?

Thank you. Yes. Indeed, I think both Vanessa and Greg explained that in the past, we might have tried on a less sort of structured manner to double into certain products. But this time around is very, very different. I think we are very mindful of a shift in the macro picture. The timing is very interesting in the sense that we are seeing, and I think I've mentioned it a few times during my presentation, a desire from investors globally to diversify. And it's not confined to one asset class.

I think we see investors in the midst of the global uncertainty, be it geopolitical, be it macroeconomic, they want to make sure that they have a more diverse set of investment opportunities. And case in point, right, in the not-too-distant past, we see investors sort of trying to put more money in different markets, a lot of which we benefited from, in Asia. different asset classes from gold to silver. And even traditional what is considered safe havens like U.S. treasuries, people are having second thought about. So with that as the backdrop, we do believe that the timing is right for us to once again revisit how we build a multi-asset ecosystem.

But this time, it has to be a more holistic approach. It has to be not just confined to launching a few products, but thinking about how we develop with the help of partners a more comprehensive ecosystem. And that's the thinking behind these initiatives that we are rolling out one by one. Now I mentioned earlier, the CMU OmniClear investment is just one small step in that direction. Vanessa has explained that we have more planned out. To your specific question, so when are we going to see the return come back, right? I think that's very difficult to quantify and say exactly when. But suffice to say that as we all know, right, compare the equities markets with the fixed income market, the fixed income market is exponentially much bigger. And therefore, we do see tremendous opportunity in the FICC space. So sorry, and I'm not able to quantify it for you, but suffice to say that we do firmly believe that it is really worth our time and investment. I don't know if my colleagues want to supplement what I said.

Thank you, Bonnie. I would maybe just paint a little bit the size of the opportunity. I think the reason why we are trying to capture this opportunity now versus, say, 5 years ago, well, why didn't we choose to build an FIC ecosystem then?

The reason is very obvious is if you -- whether you look at the issuances of China government bonds or the issuances of [indiscernible] bonds in Hong Kong, you see almost this escalating curve upwards. And this is not a curve that is a prediction. This is an actual numbers curve, right? So 5 years ago or 10 years ago, that wasn't the case. I would also say that 5 years ago, 10 years ago, RMB internationalization as a government policy or as a central policy wasn't quite the same. So the tailwind is definitely there. The policy support is definitely there. And therefore, this is the time to do it. Now if this is the time to do it, to your question, is it actually worthwhile? Is there a big price at the end of it? It's tricky to suddenly put through forecast based on a vision.

But if you look at what other exchanges in the world are able to achieve in terms of their revenue from fixed income versus the rest of their revenue. Actually, Hong Kong Exchange is in a class of its own because we have a very strong equity franchise and IPO franchise. How do other exchanges who don't have that make money? A lot of it actually comes from fixed income or fixed income-related products and ecosystem. And not to mention players in the world that actually specialize in CSD, centralized securities depository, which is basically what we're trying to do with our CMU acquisition. So putting all of those things together, a strong backdrop, policy support and viable business models, which have been proven in other parts of the world and in our peers, why wouldn't Hong Kong Exchange grab this opportunity now and build for the future? Greg, do you have something?

Yes. I guess quickly, right, with the [indiscernible] road map, it painted a very clear picture that when we talk about fixed income, it's quite comprehensive. We're talking about, obviously, Vanessa mentioned the government bonds, circulation and then maybe all the derivatives around it, clearing. Then you were talking about the potential buildup of a credit market now once you have more of the offshore curve pricing, then you will have data, then you have index, then you have ETFs and so forth.

And with the backdrop of global investors looking to diversify, right, I think I might have mentioned it before, equities market, yes, it's strong because people are coming over to Hong Kong, strong IPO pipelines and so forth. But truly, if you -- if people are wanting to diversify and want to keep their money split up in different geographical area or different asset class base or whatsoever, fixed income is the most important part, much more important than equity. So with this particular backdrop, the policy support and I think with our will in developing various different platforms and products around it, we have strong conviction that this will bring a good revenue diversification opportunity for us.

Thank you. I think this marks the end of today's session. Thank you, everyone, for joining us today on the line, and we look forward to continue to engage with you, and please reach out to myself and IR team for any follow-up questions. Have a good evening.