China/Hong Kong Regulators Announce Shenzhen-Hong Kong Stock Connect

The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) today announced the approval, in principle, of the structure of Shenzhen-Hong Kong Stock Connect (Note 1), which will provide mutual stock market access between Hong Kong and Shenzhen via a northbound trading link and a southbound trading link (Note 2). There will be no aggregate quota (Note 3) under Shenzhen-Hong Kong Stock Connect.

Today’s joint announcement issued by the SFC and the CSRC also abolishes the aggregate quota under Shanghai-Hong Kong Stock Connect with immediate effect (Note 4).

"The expansion of mutual stock market access represents yet another milestone towards strengthening the interconnectivity between the stock markets in Hong Kong and the Mainland as well as consolidating Hong Kong’s position as a major offshore renminbi centre," said Mr Carlson Tong, the SFC’s Chairman.

The launch of Shenzhen-Hong Kong Stock Connect is subject to the finalisation of all necessary regulatory approvals, market readiness and relevant operational arrangements.

A separate announcement on the commencement of Shenzhen-Hong Kong Stock Connect will be made in due course.

Notes:

1. Please see joint announcement by the SFC and the CSRC issued today.
2. Shares eligible under the northbound trading link of Shenzhen-Hong Kong Stock Connect are any constituent stock of the SZSE Component Index and SZSE Small/Mid Cap Innovation Index which has a market capitalisation of not less than RMB6 billion and shares listed on the Shenzhen Stock Exchange (SZSE) issued by companies which have also issued H-shares.
3. Shares eligible under the southbound trading link of Shenzhen-Hong Kong Stock Connect are constituent stocks of the Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap Index, any constituent stock of the Hang Seng Composite SmallCap Index which has a market capitalisation of not less than HK$5 billion, and shares listed on The Stock Exchange of Hong Kong Limited (SEHK) issued by companies which have also issued A-shares.
4. SEHK and SZSE will make separate announcements on the calculation formulas and methods for determining eligible shares which meet the requirements of the above-mentioned market capitalisations.
5. Aggregate quota refers to the maximum cross-boundary investment amount that investors in one market can make in the other market.
6. Please see the 10 April 2014 joint announcement by the SFC and the CSRC regarding the launch of Shanghai-Hong Kong Stock Connect.