An increase of 224% year-on-year.

The latest data from HKEX shows that the average daily turnover in October 2024 was 255 billion HKD, an increase of 224% year-on-year, and an increase of 50.73% from the previous month. Wind data indicates that this number has exceeded the 245.7 billion HKD in January 2021, setting the highest record since data collection began in 2003.

Similarly, in October of this year, the average daily trading volume for Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect (ETFs and stocks) was 270.139 billion RMB, a significant increase of 108.3% month-on-month; the average daily trading volume for Hong Kong Stock Connect (ETFs and stocks) was 101.523 billion HKD, an increase of 63.9% from the previous month. In fact, on October 8, 2024, the trading volume of Hong Kong stocks reached a historical high of 620.7 billion HKD. On the same day, the trading volume of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect for northbound and southbound transactions respectively reached historical highs of 510.1 billion RMB and 280.3 billion HKD.

Expanding the timeframe to the first 10 months of this year, the average daily turnover of the Hong Kong securities market stood at 127.8 billion HKD, up by 20% year-on-year; the average daily turnover of exchange-traded funds was 15.1 billion HKD, representing a 30% year-on-year increase; the average daily turnover of leverage and inverse products was 2.9 billion HKD, an increase of 32% year-on-year.

Looking at the primary market, in the first 10 months of this year, Hong Kong welcomed a total of 54 new listed companies of stocks, an increase of 4% compared to the same period last year; the total amount raised from initial public offerings was 68.6 billion HKD, a 116% increase from 31.7 billion HKD in the same period last year; the total funds raised amounted to 149.7 billion HKD, up by 37% from 109.1 billion HKD in the same period last year.

In terms of the derivatives market, according to the latest data from HKEX, the average daily trading volume of futures and options in the first 10 months of 2024 was 1.5826 million contracts, a 17% year-on-year increase; the average daily trading volume of RMB currency futures was 0.0896 million contracts, up by 171% year-on-year.

On October 3rd, the trading volume of weekly Hang Seng Index options hit a historical high of 0.0421 million contracts; on October 8th, the trading volume of weekly Hang Seng Tech Index options reached a historical high of 6754 contracts, while the trading volume of single stock futures reached a historical high of 0.0483 million contracts; on October 9th, the trading volume of Mini Hang Seng Index futures hit a historical high of 0.3402 million contracts, and the Hang Seng China Enterprises Index futures and options trading volume reached a historical high of 0.1375 million contracts.

Since October, the Hong Kong stock market has seen a noticeable pullback, with market trading activity continuing to rise. On October 31, the Hang Seng Index closed at 20,317.33 points, a monthly decline of 3.86%, with the total turnover reaching 5.35 trillion Hong Kong dollars. Along with the rapid development of this market trend and the resurgence of primary market financing, as of the end of October this year, the total market value of the Hong Kong stock market was 35.2 trillion Hong Kong dollars, a 14% increase from the same period last year's 30.8 trillion Hong Kong dollars.

Where are the investment opportunities in Hong Kong stocks?

Behind the continued rise in trading volumes, what investment opportunities does the Hong Kong stock market still hold?

Tianfeng Securities analyst Kong Rong stated that since the first quarter of this year, the bottom of the Hong Kong stock market has been continuously rising, with the Hang Seng Index surpassing 20,000 points in October, hitting a new high for the year. Compared to global markets, Chinese assets still offer good value currently. Based on the gradual recovery expectations and anticipation of improving fundamentals in the future, Chinese concept stocks still hold attractive valuations in the Hong Kong stock market with a high risk-return ratio. As of November 1, the Hang Seng Index's forward PE ratio is discounted by -0.8 standard deviations compared to the median in 2019, around 30.5% historical percentile.

Looking ahead, domestically, economic-related policies continue to be rolled out, with further room for policy expansion." GTJA Securities analyst Zhou Hao pointed out that the latest US employment data reflects signs of weakness in the labor market, and the Fed's hawkish policy to combat inflation is gradually narrowing. It is expected that the Fed will most likely cut rates for the second time in November, with further rate cuts to follow, confirming the trend of loosening overseas liquidity.

He believes that the current valuation level of the Hang Seng Index is not high, and with the results of the US election, the risk assessment of the Hong Kong stock market is revised downwards, judging that the future trend of the Hong Kong stock market is primarily upward, with interest-sensitive industries having greater price elasticity, including internet leaders, pharmaceuticals, and consumer industries. In addition, high dividend (utilities, banks, and telecommunication operators) industries have long-term allocation value and are also worth paying attention to.

Editor/rice