Hong Kong Exchanges and Clearing (HKG:0388) is poised to extend its gains as IPO momentum builds, the South China Morning Post reported Monday, citing a Morgan Stanley note.

The bank raised its target price to HK$500 from HK$440, citing a 41% year-to-date rise and improving sentiment around Chinese equities, the report said. The upgrade follows recent hikes by Goldman Sachs and HSBC, the SCMP added.

Easing IPO rules, a shift from financial tightening to pro-growth policies, and lower HIBOR are expected to boost trading volumes, the report said. A recent deposit rate cut and potential U.S. rate cuts could further lift activity, it added.

Hong Kong led global IPOs in the first five months of 2025, raising HK$78 billion, up more than 700% from a year earlier, the SCMP reported.

Major listings include Contemporary Amperex Technology's (CATL) (HKG:3750) $5.2 billion float, the largest of the year, and Foshan Haitian's potential $1.5 billion deal after securing listing approval, SCMP said.

Morgan Stanley now expects IPO volumes to reach HK$180 billion in 2025 and HK$310 billion in 2026, according to the report. Easing concerns over China's financial system should also reduce volatility and support sentiment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)