Hong Kong & Mainland China Stock Connect Expands to Include Foreign Companies Primary Listed in Hong Kong & Hang Seng Index Component, Expected to Include Stocks that Account for More than 80% of Equity Trading
22nd December 2022 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) have announced the expansion of the Hong Kong & Mainland China Stock Connect to include foreign companies primary listed in Hong Kong & a Hang Seng index component, with the expanded Stock Connect expected to include stocks that account for more than 80% of equity trading. Announcement: “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.” See announcement below.
” Hong Kong & Mainland China Stock Connect Expands to Include Foreign Companies Primary Listed in Hong Kong & Hang Seng Index Component, Expected to Include Stocks that Account for More than 80% of Equity Trading “
Hong Kong SFC Acting CEO, Julia Leung: “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. 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.”
HKEX Chairman, Laura M Cha: “This is another exciting milestone for our landmark Stock Connect programme, providing Mainland investors with more opportunities to invest overseas and enabling international investors to enjoy wider access to the Mainland China markets. This latest enhancement to Stock Connect will help boost the healthy development of both Mainland China and Hong Kong financial markets by bringing new connectivity, liquidity and vibrancy.”
HKEX CEO Nicolas Aguzin: “The inclusion of eligible Hong Kong stocks issued by international companies in Stock Connect will significantly enhance the attractiveness of Hong Kong as a world-leading listing venue. International issuers will not only get the full benefits of a listing in Hong Kong, but will also gain access to an enhanced and significant regional investor base. We look forward to continuing to work with our Mainland partners, regulators and the market to further enhance the mutual access between the capital markets of Mainland China and Hong Kong, as we build on our strategy of Connecting China and the World.”
Hong Kong SFC Announcement
Regulators announce expansion of eligible stocks under Stock Connect
19th Dec 2022 – 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.
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.
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.
The coverage of southbound and northbound eligible exchange-traded funds remains unchanged.
Hong Kong Exchange Announcement
HKEX Welcomes Further Expansion of Stock Connect
19th Dec 2022 – Hong Kong Exchanges and Clearing Limited (HKEX) welcomes the joint announcement today (Monday) by Hong Kong’s Securities and Futures Commission and the China Securities Regulatory Commission on the further expansion of eligible stocks under Stock Connect.
Working together with regulators, HKEX has reached an agreement with Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Corporation Limited to expand the scope of eligible stocks under Stock Connect.
Accordingly, the scope of eligible stocks will be expanded for both the Northbound and Southbound trading links as follows:
Southbound trading: The scope of eligible stocks will be expanded to include stocks of international companies that are primary-listed in Hong Kong, and are 1) constituent stocks of the Hang Seng Composite LargeCap Index or Hang Seng Composite MidCap Index, or 2) constituent stocks of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above.
In addition, the scope of eligible stocks for Southbound trading under Shanghai-Hong Kong Stock Connect will be expanded to include constituents of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above, which will align with the existing scope of eligible stocks for southbound trading under the Shenzhen-Hong Kong Stock Connect.
Northbound trading: The scope of eligible stocks for Northbound trading under Stock Connect will be changed to 1) constituent stocks of the SSE A Share Index and the SZSE Composite Index which have a market capitalisation of RMB5 billion or above and meet certain requirements such as liquidity criteria; and 2) SSE/SZSE-listed stocks of companies which have issued both A-shares and H-shares.
Upon receiving approval from the regulators, HKEX, SSE and SZSE will set out the specific requirements for the inclusion of eligible stocks and the relevant review mechanism.
HKEX will work with its partners in Hong Kong and Mainland China to make preparations for the eligibility expansion, which is expected to take around three months. Subject to regulatory approval and market readiness, a further announcement on the official implementation date will be made in due course. Please refer to the joint announcement for more details of the expansion.
About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is a publicly-traded company (HKEX Stock Code:388) and one of the world’s leading global exchange groups, offering a range of equity, derivative, commodity, fixed income and other financial markets, products and services, including the London Metals Exchange. As a superconnector and gateway between East and West, HKEX facilitates the two-way flow of capital, ideas and dialogue between China and the rest of world, through its pioneering Connect schemes, increasingly diversified product ecosystem and its deep, liquid and international markets. HKEX is a purpose-led organisation which, across its business and through the work of HKEX Foundation, seeks to connect, promote and progress its markets and the communities it supports for the prosperity of all. Visit: www.hkexgroup.com
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