UBS Group released a research report, predicting that the Hang Seng Exchange (00388.HK) will see a 50% year-on-year increase in net profit for the fourth quarter of last year to 3.9 billion yuan, which is 5% higher than the general market expectation, mainly due to possibly higher than expected net investment income and a decrease in the effective tax rate; at the same time, it predicts that quarterly revenue will increase by 34% year-on-year to 6.5 billion yuan, also slightly above market expectations. For the whole year, the bank estimates that the revenue and net profit of the Hang Seng Exchange will grow by 10% and 11% year-on-year, reaching 22.5 billion yuan and 13.2 billion yuan respectively.

Regarding market turnover, UBS Group estimates that the average daily turnover (ADT) of Hong Kong stocks in the fourth quarter will reach a record 187 billion yuan, an increase of 105% compared to the same period in 2023, with a quarter-on-quarter growth of 57%. Although the Hong Kong stock market still faces challenges, UBS Group believes that the reduction in interest rates by the Federal Reserve and the Exchange's decision to lower the minimum trading price range for Hong Kong securities at the end of last year will provide support this year, predicting that the first quarter ADT could reach 128 billion yuan, indicating a year-on-year growth of 29%.

As for the ADT forecast for this year and next, UBS Group has revised down the figures from 146 billion and 162 billion yuan to 121 billion and 133 billion yuan, reflecting a lower expected return on indices this year. Consequently, the earnings per share forecast has also been revised downward by 10% and 9%, and the target price has been lowered from 346 yuan to 306 yuan, maintaining a 'neutral' rating. The bank also mentioned that due to the possible increase in the Hong Kong government's deficit for the fiscal year 2024/25 and a sharp decline in land sale revenue, the likelihood of stamp duty exemption for stock trading is considered low.