Stock Connect, the landmark mutual market access programme linking the Hong Kong and Mainland China equity markets, this week marks its fifth anniversary amid record levels of two-way capital flows. Hong Kong Exchanges and Clearing Limited (HKEX) today (Friday) publishes some key statistics of the programme from its five-year history.
Since its launch, Stock Connect has seen sustained volume growth in both Northbound and Southbound trading to meet rising global investor demand. Total value of shares held through Stock Connect is at an all-time record, with growing participation from both Mainland and international investors.
“Since Stock Connect’s launch five years ago, it has continued to gain momentum as the world’s most effective mutual market access programme. Not only does this ground-breaking platform offer Mainland investors with many asset diversification options, it also gives international investors unparalleled access to China’s equity markets in an efficient, reliable, and convenient way. Stock Connect also helped pave the way for the launch of Bond Connect in 2017,” said HKEX Chief Executive Charles Li.
Last year, Stock Connect helped facilitate the inclusion of Chinese A-shares into key global indices, significantly raising international participation in the domestic equity market at a time of increasing market opportunity.
As at 31 October 2019, the total cumulative Northbound trading turnover on Stock Connect was RMB17.41 trillion, bringing net capital inflows of RMB860 billion into the A-share market. Hong Kong and international investors held a total of RMB1.22 trillion worth of shares listed on the Shanghai and Shenzhen exchanges as at the end of October, compared with RMB86.5 billion at the end of 2014, shortly after the launch of Stock Connect.
Meanwhile, total cumulative Southbound trading turnover was HK$8.75 trillion, bringing net capital inflows of HK$987 billion into the Hong Kong market. Mainland investors held HK$999.5 billion worth of Hong Kong-listed shares through Stock Connect as at the end of October, up from HK$13.1 billion at the end of 2014.
Shanghai-Hong Kong Stock Connect launched on 17 November 2014 while Shenzhen-Hong Kong Stock Connect launched two years later on 5 December 2016, giving the Mainland and international investors in Hong Kong direct access to each other’s market from their home market for the very first time.
Over the past few years, HKEX has worked with the Shanghai and Shenzhen stock exchanges, and other partners, to further enhance Stock Connect with the introduction of Special Segregated Accounts to its clearing system, as well as adding Real-time Delivery versus Payment for settling Northbound transactions. Other refinements include removal of the aggregate quota, increased daily quota, and the launch of the investor identification model for Northbound trading.
In addition, following the consensus reached in August between HKEX and the Shanghai and Shenzhen stock exchanges on the criteria for inclusion of Hong Kong-listed companies with weighted voting rights (WVR) in Stock Connect, the first eligible WVR companies were successfully included in Southbound trading on 28 October 2019.
“Without a doubt Stock Connect has fundamentally changed capital markets in the region, pioneering greater accessibility and offering more investor choice,” said Mr Li. “We are very much looking forward to continuing to work closely with the Mainland stock exchanges and our regulators on bringing even more opportunities to companies and investors - connecting China, connecting the world.”
The attached Fact Sheet contains useful statistics about Stock Connect.
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange, in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.