China Stock Connect three years old
November 16, 2017

The trading link between the Hong Kong and Shanghai bourses celebrates its third birthday tomorrow. Shanghai-Hong Kong Stock Connect brought China a controlled mechanism to open up its capital markets. Mutual access between the Mainland and Hong Kong stock markets was subsequently expanded with the launch of Shenzhen-Hong Kong Stock Connect in December 2016.

Stock Connect allows foreign investors to trade China's Mainland A-shares through the Hong Kong exchange, while those in Mainland China can trade Hong Kong shares through the Shanghai or Shenzhen exchange, subject to quotas. The scheme covers a total of more than 2400 eligible equities, including 900 in Shanghai, 1,000 in Shenzhen and 500 in Hong Kong.

Foreign investors have increasingly been drawn to Stock Connect. Demand for China A-shares has risen since MSCI included them in its global indexes in June this year, while this mutual access arrangement has great advantages over the earlier Qualified Foreign Institutional Investor (QFII) channel which suffers from repatriation restrictions and which brokers have retired.

Interest in Hong Kong listed equity investments has also risen among Mainland investors. Diversification into HKD assets has become attractive in the face of depreciation of the yuan – while H-shares have typically traded at a discount to their Mainland A-share equivalents.


Related articles:

Bond Connect

Hong Kong/Shenzhen Stock Connect launches

Hong Kong/China mutual recognition: a new era for Asian asset management

Hong Kong/Shanghai Stock Connect launches

China Focus: the Mainland's asset pools, the Q' channels for investment, China's pension system and reforms





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The trading link between the Hong Kong and Shanghai bourses celebrates its third birthday tomorrow. Shanghai-Hong Kong Stock Connect brought China a controlled mechanism to open up its capital markets. Mutual access between the Mainland and Hong Kong stock markets was subsequently expanded with the launch of Shenzhen-Hong Kong Stock Connect in December 2016.

Stock Connect allows foreign investors to trade China's Mainland A-shares through the Hong Kong exchange, while those in Mainland China can trade Hong Kong shares through the Shanghai or Shenzhen exchange, subject to quotas. The scheme covers a total of more than 2400 eligible equities, including 900 in Shanghai, 1,000 in Shenzhen and 500 in Hong Kong.

Foreign investors have increasingly been drawn to Stock Connect. Demand for China A-shares has risen since MSCI included them in its global indexes in June this year, while this mutual access arrangement has great advantages over the earlier Qualified Foreign Institutional Investor (QFII) channel which suffers from repatriation restrictions and which brokers have retired.

Interest in Hong Kong listed equity investments has also risen among Mainland investors. Diversification into HKD assets has become attractive in the face of depreciation of the yuan – while H-shares have typically traded at a discount to their Mainland A-share equivalents.


Related articles:

Bond Connect

Hong Kong/Shenzhen Stock Connect launches

Hong Kong/China mutual recognition: a new era for Asian asset management

Hong Kong/Shanghai Stock Connect launches

China Focus: the Mainland's asset pools, the Q' channels for investment, China's pension system and reforms