According to JPMorgan's research report, the optimization of the mutual recognition arrangement of funds between the two places by the China Securities Regulatory Commission and the extension of the effective period of the Hong Kong Monetary Authority's relaxation of mortgage ratios are believed to be increasingly positive for Value Partners Group (00806.HK), Hong Kong banks, and Chinese-funded brokerages.

JPMorgan said that in the mutual recognition agreement, Value Partners Group and Hang Seng Bank's investment management under its banner will directly benefit from the growth of the asset management scale under the enhanced flexibility, while Chinese-funded brokers and Hong Kong banks can also indirectly benefit from better income or expenses as investment funds flow into the Hong Kong market. China International Capital Corporation (03908.HK) and Huatai (06886.HK) have higher profitability contributions in the offshore market, while Hang Seng Bank and Bank of China (Hong Kong) (02388.HK) have higher asset management and brokerage income ratios.

On the other hand, a higher loan-to-value ratio should help ease the down payment pressure faced by mortgage applicants in the face of falling house prices in recent years and provide an additional catalyst for mortgage growth. In terms of loan portfolios, Hang Seng Bank and Dahsing Banking Group (02356.HK) have relatively larger exposure to mortgage loans.