[ET Net News Agency, 10 July 2018] BofA Merrill Lynch maintained its target price for
HKEX (00388) at HK$238 unchanged, but upgraded its rating to "neutral" from
"underperform".
The research house said the share price has dropped by 23% from the peak in January and
the market has factored in the negatives including lower turnover and potential
competition from domestic China (CDR issuance).
BofAML believes the ADT (Average Daily Turnover) in Hong Kong will remain above HK$100bn
in the next two to three years with more upside than downside, and the turnover could
support HKEX's revenue, though in the near-term, its growth will likely be slower than
what the consensus expects.
Meanwhile, China delayed the first CDR issuance, which had been previously expected in
early July, as the market was weak and volatile, HKEX has completed its first WVR
(Weighted Voting Rights) structure company listing after it changed the IPO rules in
April.
The difference in regulatory philosophy marks the difference between the stock markets
in Hong Kong and Mainland China, and BofAML believes rules and visibility make Hong Kong
more attractive to IPO companies. (KL)