Hong Kong Exchanges and Clearing Limited (HKEX), the Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Co Ltd (CSDC) co-hosted a seminar in Shenzhen on 2 December to celebrate the first anniversary of Shenzhen-Hong Kong Stock Connect and explore ways to further improve the Connect programme.
Vice Chairman of the China Securities Regulatory Commission Fang Xinghai, Securities and Futures Commission Senior Director Jane Gao, HKEX Chief Executive Charles Li, SZSE President Wang Jianjun and CSDC Chairman Zhou Ming spoke about Stock Connect and opportunities through the scheme at the seminar, which was attended by representatives from dozens of domestic and overseas brokerages and institutional investors.
Since its launch on 5 December 2016, Shenzhen-Hong Kong Stock Connect has been operating smoothly with a steady increase in turnover and a net inflow of cross-border funds. As of 1 December 2017, there was HK$475.9 billion in Southbound turnover, bringing a net capital inflow of HK$111.5 billion into the Hong Kong market. Northbound trading turnover has reached RMB875.3 billion, bringing a net capital inflow of RMB148.5 billion into the Shenzhen stock market.
CSRC Vice Chairman Fang Xinghai said that the success of the Stock Connect has made the A share market significantly more attractive to overseas investors and contributed to the inclusion of A shares in the MSCI benchmark index. The CSRC will continue to improve the Connect mechanism, provide more risk management tools for both domestic and foreign investors, and further facilitate capital markets internationalisation in China, Fang said.
“Shenzhen-Hong Kong Stock Connect is an integral part of our mutual market access programme that is opening up a new universe of investment opportunities for Mainland, Hong Kong and international investors,” HKEX Chief Executive Charles Li said. “We are extremely pleased to see that Shenzhen-Hong Kong Stock Connect has been stable and reliable since launch, and has won the trust of regulators and investors on both sides of the border.”
“Through the scheme’s unique design, which includes order routing in gross along with clearing and settlement in net, the markets on both sides can be connected with the least amount of changes to their respective existing regulatory systems, market structure and market practices,” Li continued. “In other words, the programme has been successful in achieving the maximum benefits of a free and open trading market for the Mainland with minimum costs and inconvenience. At the same time, Hong Kong has also secured significant strategic benefits by consolidating its position as an international market.”
“In the future, we will continue to work closely with the Mainland counterparts and regulatory authorities to improve Stock Connect and add more products such as ETFs and bonds to the schemes, ” he added.
SZSE President Wang Jianjun said: “Shenzhen-Hong Kong Stock Connect has facilitated global asset allocation for investors in both the Mainland and Hong Kong and improved operational and financial standards for companies listed on the Shenzhen Stock Exchange. The Connect has also promoted the internationalisation of capital markets in China and has had a positive and profound impact on reform and development. The next step for the Shenzhen Stock Exchange is to promote the inclusion of ETFs in scheme, optimise holiday trading arrangements and continuously improve cross-border capital services.”