HKEX Launches Co-Branded Indices to Deepen Asian Market Connectivity

Hong Kong Exchanges and Clearing Limited (HKEX) CEO Chen Yijing announced on April 15 a strategic initiative to strengthen Asian capital market connectivity through product innovation and institutional development. The announcement, made via an official blog post, outlined HKEX’s role as a “super-connector” linking regional exchanges and investors to unlock growth opportunities across Asia’s rapidly expanding investment landscape.

Asian Capital Market Growth and Investment Opportunity

Asian stock market capitalization has expanded significantly over the past two decades, reaching $34.4 trillion by the end of 2024 — representing a fourfold increase since 2000, according to HKEX data cited in Chen’s statement. International investor allocation to Asian stocks has doubled from 2014 to 2024, reaching approximately $6 trillion, reflecting growing confidence in the region’s economic fundamentals and growth potential. Chen emphasized that despite current geopolitical complexities, international investment partners remain increasingly eager to participate in Asian capital markets.

China’s mainland market represents the largest and most dynamic growth opportunity within Asia, while other regional markets host numerous globally competitive innovative companies and boast deep, diversified investor bases. This combination creates a compelling case for enhanced cross-border capital flows and market integration.

Product Innovation Strategy: Co-Branded Indices and ETF Development

To advance its product ecosystem and index business strategy, HKEX has developed benchmark indices designed to drive product innovation and deepen market interconnectedness. Most recently, HKEX launched co-branded indices in partnership with Malaysia Bursa and Korea Exchange (KRX), each focusing on the most dynamic enterprises listed on their respective markets.

Both indices employ identical weight distributions: approximately 60% Hong Kong-listed companies and 40% overseas-listed companies. This structure aligns with the eligibility criteria for exchange-traded funds (ETFs) to be included in the Stock Connect program, which permits mainland Chinese investors to trade Hong Kong-listed securities. The indices are specifically designed to encourage ETF product development, providing mainland investors with expanded cross-market investment opportunities. Multiple ETF issuers have already expressed interest in launching products that track these indices.

Beyond ETF applications, the indices serve as foundations for developing diverse structured products and derivatives. By establishing cross-market benchmark indices, HKEX can build futures, options, and risk management instruments on top of this infrastructure, deepening market liquidity, enhancing price discovery, and enabling investors to deploy more sophisticated Asian investment strategies. Future product innovation will further strengthen regional connectivity by providing increasingly varied investment tools tailored to regional investor needs, facilitating more effective hedging and portfolio construction while attracting diverse market participants to Hong Kong.

Cross-Listing Pathways and Platform Development

Beyond product innovation, HKEX is advancing platform development initiatives. The exchange recently signed a memorandum of understanding (MOU) with Malaysia Bursa to explore expanded dual-listing pathways, continuing a broader pattern of deepening cooperation with Southeast Asian markets. HKEX has previously established recognized securities exchange arrangements with the Thai Securities Exchange, Indonesia Stock Exchange, and Singapore Exchange, with additional similar arrangements expected in the future.

Southeast Asian companies have demonstrated strong preference for Hong Kong as an overseas listing destination. Over 150 ASEAN companies are currently listed in Hong Kong, having collectively raised more than $4.3 billion. As Malaysia and Southeast Asia see increasing numbers of high-quality companies emerging to compete internationally, cross-border listing has become a natural progression for regional enterprises seeking global capital access. Through bidirectional interconnection mechanisms, HKEX can complement its market partners by connecting Asian enterprises with international capital and mainland Chinese investors, while simultaneously providing global and mainland investors access to emerging market opportunities across Asia.

Liquidity Enhancement and Regional Cooperation Framework

Chen articulated HKEX’s objective to attract greater participation from global market participants by developing new products and building additional platforms, thereby enhancing overall Asian market liquidity. While acknowledging that this undertaking will not materialize immediately and faces operational and geopolitical challenges, Chen emphasized that the ultimate outcome — a vibrant, globally connected Asian market ecosystem capable of driving regional development for the next decade and beyond — justifies sustained effort and commitment.

The Asia-Pacific Securities Exchange Federation (AOSEF) will hold its 40th annual meeting in Hong Kong in the coming week, bringing together representatives from 17 Asian exchanges. Chen expressed anticipation for collaborative discussions with regional partners to establish shared objectives and advance cross-market interconnection initiatives.

Through deepened regional cooperation and strengthened connectivity bridges, Hong Kong can leverage its existing advantages to aggregate capital within Asia, expand the regional capital pool, optimize price discovery mechanisms, and enhance capital market resilience — ultimately better serving Asian and global enterprises, investors, and economies.

Frequently Asked Questions

Q: What are the new co-branded indices launched by HKEX, and how do they differ from existing indices?

HKEX launched co-branded indices in partnership with Malaysia Bursa and Korea Exchange, each comprising 60% Hong Kong-listed companies and 40% overseas-listed companies. Unlike traditional single-market indices, these cross-market indices are specifically designed to support ETF development under Stock Connect standards and facilitate mainland Chinese investor access to regional markets.

Q: How do the new indices support ETF product development?

The 60/40 weight distribution of the co-branded indices meets the eligibility criteria for inclusion in the Stock Connect ETF program, which allows mainland investors to purchase Hong Kong-listed ETF products. Multiple ETF issuers have already indicated interest in launching funds that track these indices, expanding investment options for regional investors.

Q: What is the dual-listing pathway HKEX is exploring with Malaysia Bursa?

The MOU signed between HKEX and Malaysia Bursa aims to explore expanded mechanisms enabling companies to list simultaneously on both exchanges. This initiative builds on HKEX’s recognition as the preferred overseas listing destination for Southeast Asian companies, with over 150 ASEAN firms already listed in Hong Kong having raised more than $4.3 billion collectively.