Morgan Stanley raises target price of Hong Kong Exchange (00388) to HK$515 and maintains "overweight" rating.

Morgan Stanley released a research report stating that it has updated its forecasts for Hong Kong Exchanges and Clearing Limited (00388), raising the earnings per share forecast for HKEX by 1.7%, 1%, and 0.4% for the years 2026 to 2028, and expecting earnings per share to increase by 2.8%, 6.8%, and 6.9% during that period. The bank has also raised the target price for HKEX from HK$510 to HK$515, maintaining a "hold" rating. The bank slightly lowered its forecast for the average daily trading volume of derivative products, projecting a 6% and 10% year-on-year increase in the average daily trading volume of futures and options this year. However, Morgan Stanley raised its forecast for listing expenses to reflect the strong IPO pipeline and performance of Exchange For Derivatives (EFD) business. Additionally, it raised the net investment income forecast for HKEX in years 2026 to 2027 by 4% to 5%, and slightly lowered the total expenses forecast by 0.4% due to cost discipline.