Goldman Sachs lifted its target price for HKEX (00388) to HK$228 from HK$225 and maintained its "neutral" rating.
The research house said LME announced an 8% increase in trading and clearing fees beginning 2020. This is the first such increase since 2015. The 2015 fee increases had to be rolled back subsequently as LME lost market share post a fee increase generally seen as unreasonable by the LME "ecosystem".
The latest reported DDAV (derivatives daily average volume) as of 3Q of 617k lots (-1%) was 10% below the 4Q 2014 level. Goldman expects 5% 2020-22 average volume growth at LME and now factored in the 8% overall fee rate increase.
Goldman thus raised its HKEX EPS forecasts by 1% for 2020-22.