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The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) today jointly announced their in-principle approval for the further expansion of the scope of stocks eligible for trading under Mainland-Hong Kong Stock Connect.
After the expansion, which will cover both northbound (Note 1) and southbound (Note 2) trading, Stock Connect is expected to include stocks that account for more than 80% of the equity trading in each market (Note 3). This will strengthen mutual access between the Mainland and Hong Kong stock markets and provide additional liquidity for both markets.
“The further expansion of the scope of Stock Connect will give international investors more choice in A shares and consolidate Hong Kong’s position as a gateway to Mainland China,” said Ms Julia Leung, the SFC’s Acting Chief Executive Officer. “In particular, the inclusion of foreign companies primary listed in Hong Kong is of strategic importance to Hong Kong as a leading fundraising platform for international companies.”
Preparations for the implementation of these adjustments will take about three months, subject to market readiness and the completion of operational arrangements. The stock exchanges will announce the implementation details and the official launch date in due course.
Notes:
1. Eligible stocks for northbound trading will 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., along with the SSE and SZSE-listed stocks of companies which have issued both A shares and H shares.
2. The scope of eligible stocks for southbound trading will be expanded to include the stocks of foreign companies primary listed in Hong Kong which are constituents of the Hang Seng Composite Indices and meet relevant criteria (ie, are constituents of the Hang Seng Composite LargeCap Index and 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, the scope of the stocks eligible for the southbound trading under Shanghai-Hong Kong Stock Connect will be aligned with that under Shenzhen-Hong Kong Stock Connect.
3. The coverage of southbound and northbound eligible exchange-traded funds remains unchanged.
