China Mainland and Hong Kong Stock Connect Sees Largest-Ever Expansion
Liao Shumin
DATE:  Mar 13 2023
/ SOURCE:  Yicai
China Mainland and Hong Kong Stock Connect Sees Largest-Ever Expansion China Mainland and Hong Kong Stock Connect Sees Largest-Ever Expansion

(Yicai Global) March 13 -- The Chinese mainland and Hong Kong stock connect program marked its biggest-ever two-way expansion today.

Some 598 new stocks were added to the Shanghai Stock Connect, boosting it to 1,192, while the Shenzhen Stock Connect included 436 for a total of 1,336, Securities Daily reported today. The market value coverage rate of the Shanghai Connect jumped 15.6 points to 91 percent, while that of the Shenzhen Connect rose 9.6 points to 86 percent.

Among the newly added stocks, 147 were from Shanghai's Star Market and 188 from Shenzhen's ChiNext board. After the expansion, Star Market stocks totaled 214, while the ChiNext’s reached 478.

“This expansion further increases the inclusion of growth-oriented and innovative high-quality targets, giving investors more choices and convenience when allocating diversified high-quality assets,” said Zhong Yongling, managing director of the Chinese branch of UK lender HSBC Holdings. 

The expansion will likely attract more overseas professional investment funds into the Chinese stock market, enhancing market activity and liquidity, Zhong added.

The Shanghai Connect launched in 2014, while the Shenzhen Connect followed two years later. Local exchanges and clearing houses have continuously enriched and expanded the scope of Stock Connect targets ever since.

Hong Kong Exchanges and Clearing will further expand the scope of stock connect targets, it said on March 3. The market capitalization threshold for Shanghai and Shenzhen Connect stocks was lowered to CNY5 billion (USD730 million), with the shares of major listed foreign companies in Hong Kong, which meet the relevant conditions, also to be included as targets, it added.

The turnover of funds flowing into Chinese mainland markets has been stable at between 10 percent and 11 percent since 2019, according to data from Wind Information. The proportion of funds flowing into Hong Kong has gradually increased, accounting for 15.8 percent in 2019 and 32.7 percent as of March 10.

The stock connect program is one of the most important channels for foreign capital to participate in the mainland market. As of March 10, the funds flowing into Shanghai and Shenzhen from Hong Kong via the Stock Connect stood at CNY1.87 trillion (USD272.3 billion), of which CNY990.2 billion (USD144.2 billion) went to Shanghai and CNY884.18 billion to Shenzhen.

Editor: Martin Kadiev

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Keywords:   Shenzhen-Hong Kong Connet,Shanghai-Hong Kong Connect