BofA Global Research lifted its target price for HKEX (00388) to HK$549 from HK$482 on earnings revision and maintained its "neutral" rating as positive drivers are largely priced in.
Following the release of FY2020 results, the research house raised its 2021-22 average daily turnover assumption from HK$150/170bn to HK$200/240bn and 2021-22 earnings forecasts by 12-15%.
HKEX named Nicolas Aguzin as its new CEO in February. BofA does not think the company will make major strategic changes in the near future due to the CEO change. It expects the new management to focus on IPOs, derivatives, and Stock Connect expansion.
The HK government announced that it plans to hike stamp duty tax from 0.10% now to 0.13%. BofA thinks the impact on the turnover should be neutral in the near-term as the market remains strong and brokers may lower their commission rates for retail investors. But for the long-term, the high trading costs will be negative for HKEX to expand its investor base.
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