The Hong Kong Special Administrative Region Government today warmly welcomed the expansion of the scope of eligible stocks under Stock Connect.
The China Securities Regulatory Commission and the Securities & Futures Commission issued a joint announcement today on the in-principle approval for the Mainland and Hong Kong exchanges to further expand the scope of eligible stocks under the programme.
Expressing gratitude towards the country’s staunch support for Hong Kong, Chief Executive John Lee said that in accordance with the development direction in the National 14th Five-Year Plan, the Hong Kong SAR Government has strived to strengthen Hong Kong’s position and function as an international financial centre and global offshore renminbi business hub, while deepening and widening the mutual access between financial markets of the Mainland and Hong Kong.
He said the measure announced by the regulators of the two places today signifies another milestone after the inclusion of Exchange-traded Funds in the mutual access programme in July, further enhancing Hong Kong’s role as the bridge connecting Mainland and overseas investors.
The measure also offers more diverse investment choices to Mainland and overseas investors, thereby injecting impetus into cross-boundary market liquidity, Mr Lee added.
Financial Secretary Paul Chan supplemented that the arrangement to expand mutual access is of strategic meaning to both the future development of Hong Kong’s securities market and the higher-quality opening up of the Mainland’s securities market.
He said: “Notably, in addition to enriching asset allocation choices for Mainland investors, the inclusion of eligible stocks of foreign companies under Southbound trading is also conducive to attracting other quality international enterprises to list in Hong Kong and enhancing the competitiveness of the fundraising platform, thereby facilitating further development of the Hong Kong market.”
Mr Chan said he was also grateful to the Central People’s Government for the strong support, and the regulators of the two places for their efforts in taking forward the initiative.
He added that the Hong Kong SAR Government will closely collaborate with relevant Mainland institutions with a view to implementing the arrangement promptly.
According to the joint announcement, the scope of eligible stocks for Northbound trading will be expanded to include constituent stocks of the Shanghai Stock Exchange (SSE) A Share Index and the Shenzhen Stock Exchange (SZSE) Composite Index, which have a market capitalisation of RMB5 billion or above and meet certain liquidity criteria, etc, as well as stocks of companies listed on SSE/SZSE which have issued both A shares and H shares.
The scope of eligible stocks for Southbound trading will include stocks of foreign companies meeting relevant criteria, ie constituents of the Hang Seng Composite LargeCap Index and the Hang Seng Composite MidCap Index, and constituents of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above.
In addition, Southbound trading under Shanghai-Hong Kong Connect will be aligned with Southbound trading under Shenzhen-Hong Kong Connect, ie to include constituents of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above.