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Economic Watch: ETF trading under mainland-Hong Kong stock connect kicks off

Date: 2022-07-05
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BEIJING, July 4 (Xinhua) -- Trading of exchange-traded funds (ETFs) under the mainland-Hong Kong stock connect programs began on Monday, marking a significant step to deepening the cooperation of capital markets in both the Chinese mainland and Hong Kong.

The inclusion of ETFs in stock connect programs will facilitate investment for both domestic and overseas investors, and help asset managers and brokers of the Chinese mainland and Hong Kong further improve their management and service, said Cai Jianchun, general manager of the Shanghai Stock Exchange, at Monday's online launch ceremony.

The move will be conducive to the integration of capital markets in the Chinese mainland and Hong Kong, and is of far-reaching significance for promoting the two-way opening-up of the financial sector, according to Bosera Funds.

Among the first batch of ETFs included in the stock connect programs, 83 ETFs are from the domestic A-share market and four are from the Hong Kong stock market.

As an investment product widely recognized by domestic and overseas investors, ETF has the advantages of diversified investment, openness, low transaction cost and high efficiency, Sha Yan, general manager of the Shenzhen Stock Exchange, noted.

The inclusion of ETFs will enrich cross-border investment products, provide more investment convenience and opportunities for domestic and overseas investors, and promote the sustained, stable and healthy development of both the Chinese mainland and Hong Kong market, she added.

Lawrence Lau, leader of EY Greater China Financial Accounting Advisory, who saw the launch of ETF as a 'win-win' move for the capital markets, said that in the first half of the year, Chinese A-share and Hong Kong took a lead in the initial public offerings among global bourses.

With more sci-tech innovation enterprises listed on the Shanghai and Shenzhen bourses, the A-share market holds great appeal for overseas investors, while investors from the Chinese mainland also have the demand to purchase Hong Kong stocks, Lau said.

Christina Ma, head of Greater China Equities of Goldman Sachs Securities, said the inclusion marked the first step in opening up China's ETF market to international investors.

The market had long looked forward to the inclusion of ETFs, Ma said. She noted the positive market feedback on the first day of trading and expected more foreign funds to flow into the A-share market through the mechanism in the future.

A total of 437 ETFs are currently traded on the Shanghai Stock Exchange, with a market capitalization of 1.2 trillion yuan (178.9 billion U.S. dollars) and a turnover of 6.6 trillion yuan, data showed.


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