The Hong Kong stock market is not insulated from the correction in A shares, with turnover falling more than the mainland market. In its latest report to clients, HSBC said this should significantly affect brokers' earnings outlook and some cross-border initiatives could be delayed. "The declining cash turnover is likely to weigh on their brokerage business and lead to lower demand for margin financing, while reduced market activities will likely hurt the underwriting business," the report said. "Stock price volatility could [adversely affect] the brokers' trading business." However, the bank believes brokerages have the solid balance sheet to ride out the storm. HSBC sees faster-than-expected market recovery and new cross-border initiatives as upside risks, whereas unfavourable changes to the market and liquidity conditions are cited as downside risks.