Trading in Hong Kong’s exchange-traded funds (ETFs) and leveraged and inverse (L&I) products rose sharply in the financial year ending March 2026, with average daily turnover jumping over 50 percent year-on-year to HK$38.1 billion ($4.86 billion), the city’s securities regulator said on Wednesday.
In its annual report, the Securities and Futures Commission (SFC) said their combined market capitalization rose a quarter to HK$651.2 billion. Single-stock L&I products saw particularly strong growth, with market value surging 60 times.
Assets under management (AUM) of Hong Kong-domiciled funds increased nearly 20 percent to HK$2.3 trillion, driven by solid net inflows.
Beyond investment funds, the SFC said Hong Kong’s capital markets made remarkable strides across multiple asset classes, such as equities and digital assets.
Average daily turnover of Hong Kong stocks rose 54 percent to a record HK$258 billion in the financial year, while funds raised through initial public offerings more than tripled to HK$379 billion.
Cross-border trading through Stock Connect remained a strong driver. Southbound trading, which refers to mainland investors buying Hong Kong-listed shares, nearly doubled, accounting for a record 24 percent of the city’s total market turnover.
“Initiatives launched over the past year to improve sponsors’ quality, narrow bid-ask spreads and lower collateral costs are already delivering impact,” SFC CEO Julia Leung Fung-yee said. More reforms, including those to board lot sizes and the launch of the uncertificated securities market, are in the pipeline, she added.
“Deeper connectivity is fundamental to the stable development of both mainland and Hong Kong markets,” Leung said, adding that measures such as including renminbi counters in southbound trading and incorporating real estate investment trusts into the mutual market access program — known as REIT Connect — will accelerate coordinated growth for the two markets.
Amid a complex global backdrop, “the top priority for Hong Kong’s markets is to remain orderly, trusted and open for business”, said SFC Chairman Kelvin Wong Tin-yau.
Looking ahead, Wong noted that the regulator will stay focused on deepening market resilience, driving high-quality development, steering responsible innovation, and reinforcing Hong Kong’s unique role as a gateway connecting the Chinese mainland and the global market.
The report also highlighted vibrant developments in digital assets. The AUM of SFC-authorized tokenized retail products gained nearly six times year-on-year to around HK$11 billion as of March. Market capitalization of virtual asset spot ETFs increased 90 percent since their 2024 debut, and turnover of Hong Kong’s 12 licensed virtual asset trading platforms more than doubled.
At the same time, authorities are studying amendments to the preferential tax regime for funds, family-owned investment holding vehicles and carried interest. Proposed changes include expanding the scope of eligible investments to cover loans, digital assets, precious metals and certain commodities.
Speaking at the Legislative Council on Wednesday, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the enhancements would create new business opportunities for Hong Kong’s asset and wealth management industry.
In particular, they would help further attract private credit investment activities in the region, while complementing Hong Kong’s development in areas such as digital assets and trading of precious metals and commodities, Hui said.
