HKEX Insight

A rebalancing is underway in Hong Kong’s equity market trading activity, with liquidity becoming more evenly spread across company sizes and sectors.

Liquidity gauges the ease and efficiency of buying or selling a security and can be measured using metrics such as average daily turnover (ADT).

As a whole, Hong Kong’s market liquidity has increased in recent years, with cash market ADT rising 90% year-on-year to reach a record HK$250 billion in 2025.

Rising liquidity is an indication that the market is able to digest larger transactions more efficiently: between 2022 and 2025, the average trading days required to complete Hong Kong share placements sized US$50 million and higher decreased from nearly nine days to around five-and-a-half days, even as the average deal size more than doubled to US$334 million over the same period.

Furthermore, trading activity has become less concentrated in large-cap names and flowed towards a wider range of company sizes and a greater selection of sectors.

Supported by continuous listing enhancements, including Chapters 18A and 18C¹ and the launch of the Technology Enterprises Channel, Hong Kong's listed issuer universe has expanded significantly in both number and diversity in recent years, giving investors a larger set of opportunities to choose from.

Notably, a new generation of innovation-driven issuers from sectors such as Healthcare and TMT have listed and attracted significant interest from investors, driving a marked increase in turnover².

This reflects a long-term shift among investors in the Chinese Mainland and from around the world towards growth sectors such as new energy, EVs and AI, with strong secondary market performance attracting more liquidity into these verticals, perpetuating the shift in investing activity.

 

Trading turnover for the Healthcare sector – of which biotech is a sub-sector – saw a more than 11-fold increase between 2015 and 2025, while TMT-sector liquidity grew 10-fold, according to HKEX data – outpacing the overall 2.3-fold increase in market turnover over the same period.

This has driven long-term structural diversification in the market, positioning Hong Kong as a world-leading fundraising hub in 2025 across sectors and sub-sectors from biotech to metals & mining.

 

In this fast-growing market, Hong Kong's trading turnover has become more evenly distributed across company sizes, and in 2025 small- and mid-cap companies experienced increased trading activity.

Over the year, the top 21-100 stocks by market capitalisation gained US$1 billion in ADT and the stocks outside the top 100 saw a US$1.3 billion increase – rising 19% and 17% year-on-year, respectively.

 

Likewise, the share of turnover attributed to the top 21-100 stocks rose to 29% and stocks outside the top 100 accounted for 36% of turnover compared with 24% and 30%, respectively, in 2024, underscoring the development of a more robust middle market beyond the largest names.

This liquidity rebalancing reflects deliberate, multi-year efforts to enhance market microstructure and reduce barriers to investor participation.

Ongoing reviews of board lot structures, minimum spread reductions and settlement infrastructure modernisation have all contributed to lowering transaction costs – facilitating smaller orders and more frequent trading, particularly impactful for smaller stocks as it supports price discovery and encourage investor participation.

In tandem, the continued development of derivatives, ETFs and thematic products linked to specific sectors or market cap segments is creating connected product ecosystems that are self-reinforcing, growing market liquidity and strengthening Hong Kong’s role as a global financial centre.

Together, these enhancements create an environment that supports higher levels of trading activity and drives liquidity across sectors and companies, be it a large financial institution, a mid-cap industrial company, or an innovative biotech firm conducting breakthrough clinical trials – as the next instalment of this series will explore.

 

1. Chapters 18A and 18C are listing pathways for biotech and specialist technology companies, respectively.
2. Includes listed stock ordinary and preference shares.

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