From slump to surge
30 September 2025
Matt Chessum, director of Íø±¬³Ô¹Ï Finance, ETF, and Benchmarking Services, reviews how Hong Kong's securities lending market achieved its recent 232 per cent growth in monthly year-on-year revenues
Image: Shutterstock
The Hong Kong securities lending market has witnessed extraordinary expansion over the past year, with key metrics showing substantial year-on-year (YoY) improvements across revenues, balances, fees, and utilisation rates. This growth coincides with the broader recovery in the Hong Kong stock market, which has reached a four-year high after enduring four consecutive years of negative returns from 2020 to 2023.
Surging revenue performance
Íø±¬³Ô¹Ï lending revenue in Hong Kong has demonstrated impressive growth throughout 2025. Year-to-date (YTD) to the end of August, revenue has reached US$521.3 million, representing a robust 33.6 per cent increase compared to the US$390.1 million generated during the same period in 2024. The third quarter of 2025 has been particularly strong, with revenue of US$204 million (to the end of August) marking a dramatic 126.6 per cent increase over Q3 2024 with a month still to go.
The monthly breakdown reveals even more striking growth patterns. July and August 2025 saw extraordinary YoY revenue increases of 216.3 per cent and 232.4 per cent respectively, generating US$94.2 million and US$109.8 million. This remarkable performance coincides with the period when the Hang Seng Tech Index reached its highest level in nearly four years, driven by surging investor interest in AI and technology stocks.
Balance growth reflects market confidence
The average balances in securities lending have expanded significantly, with YTD figures showing a 49 per cent increase to US$37.4 billion in 2025 compared to US$25.2 billion in 2024. This substantial growth in balances reflects increased market participation and confidence in Hong Kong's securities market.
The second quarter of 2025 saw balances reach US$40.9 billion, a 60 per cent increase from Q2 2024. However, the most dramatic growth occurred in August 2025, when balances surged to US$59.2 billion, representing a staggering 182 per cent increase compared to August 2024. This coincides with the period when Baidu and Alibaba shares surged following reports of their use of internally designed chips for AI model training, highlighting how technological advancements have stimulated market activity.
Fee improvements signal market dynamics
Lending fees have also shown consistent improvement, with the YTD average fee increasing by 12 per cent from 1.51 per cent in 2024 to 1.70 per cent in 2025. The first quarter of 2025 saw particularly strong fee growth, with rates averaging 1.83 per cent, a 33 per cent increase from Q1 2024. This fee expansion indicates growing demand for borrowed securities, likely driven by increased trading strategies around the market's recovery.
July and August 2025 recorded the highest fee rates at 2.16 per cent, representing YoY increases of 52.4 per cent and 17.7 per cent respectively. These elevated fees coincide with the period of heightened IPO activity, with fundraising reaching Hong Kong dollar 77.361 billion (US$9.9 billion) by June 2025, an astounding 714 per cent increase compared to the same period in 2024.
Utilisation rates reflect increased demand
Utilisation rates, which measure the percentage of available securities being borrowed, have shown consistent growth throughout 2025. The YTD utilisation rate stands at 5.01 per cent, representing a 24 per cent increase from 4.05 per cent in 2024. This metric is particularly important as it indicates stronger demand for securities lending in the market.
August 2025 recorded the highest utilisation rate at 6.53 per cent, a remarkable 79.6 per cent increase compared to August 2024. This peak in utilisation aligns with the surge in tech stock performance, suggesting increased trading activity around these high-growth sectors.
Market context: Recovery and transformation
The expansion in securities lending activity directly correlates with Hong Kong's stock market recovery. The Hang Seng Index reaching a four-year high in September 2025 marks a significant turnaround after four consecutive years of negative returns. This recovery has been fuelled by several factors that have directly impacted securities lending metrics.
Figure 1: Íø±¬³Ô¹Ï lending revenues Hong Kong listed assets
Source: S&P Global Íø±¬³Ô¹Ï Finance
The surge in IPO activity has been particularly influential, with 66 IPOs raising HK$182.3 billion in the first three quarters of 2025 alone. This 228 per cent increase in funds raised compared to the previous year has expanded the pool of lendable securities, contributing to the growth in balances while maintaining strong utilisation rates.
Policy changes have also played a crucial role, with HKEX's ‘Special Tech Chapter’ and Chapter 18C lowering barriers for specialised tech companies. These initiatives have accelerated the listing process and attracted more technology firms to the exchange, expanding the universe of securities available for lending and borrowing.
The recovery of the Chinese property sector, despite some continued underlying challenges, has contributed to market stability. Meanwhile, investor enthusiasm for AI and technology stocks has driven significant price movements, creating opportunities for securities lending as investors implement various trading strategies around these volatile but high-growth sectors.
Looking forward
As Hong Kong continues its market recovery, the securities lending market appears well-positioned for continued growth. The combination of strong IPO activity, policy support, and investor interest in emerging sectors provides a solid foundation for further expansion in lending revenues, balances, and utilisation.
However, analysts' cautions about potential overvaluation in certain tech and AI-related sectors suggest that market volatility may increase, potentially creating both opportunities and challenges for securities lending participants in the coming months.
Surging revenue performance
Íø±¬³Ô¹Ï lending revenue in Hong Kong has demonstrated impressive growth throughout 2025. Year-to-date (YTD) to the end of August, revenue has reached US$521.3 million, representing a robust 33.6 per cent increase compared to the US$390.1 million generated during the same period in 2024. The third quarter of 2025 has been particularly strong, with revenue of US$204 million (to the end of August) marking a dramatic 126.6 per cent increase over Q3 2024 with a month still to go.
The monthly breakdown reveals even more striking growth patterns. July and August 2025 saw extraordinary YoY revenue increases of 216.3 per cent and 232.4 per cent respectively, generating US$94.2 million and US$109.8 million. This remarkable performance coincides with the period when the Hang Seng Tech Index reached its highest level in nearly four years, driven by surging investor interest in AI and technology stocks.
Balance growth reflects market confidence
The average balances in securities lending have expanded significantly, with YTD figures showing a 49 per cent increase to US$37.4 billion in 2025 compared to US$25.2 billion in 2024. This substantial growth in balances reflects increased market participation and confidence in Hong Kong's securities market.
The second quarter of 2025 saw balances reach US$40.9 billion, a 60 per cent increase from Q2 2024. However, the most dramatic growth occurred in August 2025, when balances surged to US$59.2 billion, representing a staggering 182 per cent increase compared to August 2024. This coincides with the period when Baidu and Alibaba shares surged following reports of their use of internally designed chips for AI model training, highlighting how technological advancements have stimulated market activity.
Fee improvements signal market dynamics
Lending fees have also shown consistent improvement, with the YTD average fee increasing by 12 per cent from 1.51 per cent in 2024 to 1.70 per cent in 2025. The first quarter of 2025 saw particularly strong fee growth, with rates averaging 1.83 per cent, a 33 per cent increase from Q1 2024. This fee expansion indicates growing demand for borrowed securities, likely driven by increased trading strategies around the market's recovery.
July and August 2025 recorded the highest fee rates at 2.16 per cent, representing YoY increases of 52.4 per cent and 17.7 per cent respectively. These elevated fees coincide with the period of heightened IPO activity, with fundraising reaching Hong Kong dollar 77.361 billion (US$9.9 billion) by June 2025, an astounding 714 per cent increase compared to the same period in 2024.
Utilisation rates reflect increased demand
Utilisation rates, which measure the percentage of available securities being borrowed, have shown consistent growth throughout 2025. The YTD utilisation rate stands at 5.01 per cent, representing a 24 per cent increase from 4.05 per cent in 2024. This metric is particularly important as it indicates stronger demand for securities lending in the market.
August 2025 recorded the highest utilisation rate at 6.53 per cent, a remarkable 79.6 per cent increase compared to August 2024. This peak in utilisation aligns with the surge in tech stock performance, suggesting increased trading activity around these high-growth sectors.
Market context: Recovery and transformation
The expansion in securities lending activity directly correlates with Hong Kong's stock market recovery. The Hang Seng Index reaching a four-year high in September 2025 marks a significant turnaround after four consecutive years of negative returns. This recovery has been fuelled by several factors that have directly impacted securities lending metrics.
Figure 1: Íø±¬³Ô¹Ï lending revenues Hong Kong listed assets
Source: S&P Global Íø±¬³Ô¹Ï Finance
The surge in IPO activity has been particularly influential, with 66 IPOs raising HK$182.3 billion in the first three quarters of 2025 alone. This 228 per cent increase in funds raised compared to the previous year has expanded the pool of lendable securities, contributing to the growth in balances while maintaining strong utilisation rates.
Policy changes have also played a crucial role, with HKEX's ‘Special Tech Chapter’ and Chapter 18C lowering barriers for specialised tech companies. These initiatives have accelerated the listing process and attracted more technology firms to the exchange, expanding the universe of securities available for lending and borrowing.
The recovery of the Chinese property sector, despite some continued underlying challenges, has contributed to market stability. Meanwhile, investor enthusiasm for AI and technology stocks has driven significant price movements, creating opportunities for securities lending as investors implement various trading strategies around these volatile but high-growth sectors.
Looking forward
As Hong Kong continues its market recovery, the securities lending market appears well-positioned for continued growth. The combination of strong IPO activity, policy support, and investor interest in emerging sectors provides a solid foundation for further expansion in lending revenues, balances, and utilisation.
However, analysts' cautions about potential overvaluation in certain tech and AI-related sectors suggest that market volatility may increase, potentially creating both opportunities and challenges for securities lending participants in the coming months.
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