HK ponders timing to expand stock connect programs

By Chu Daye Source:Global Times Published: 2019/7/18 18:43:40

A view of the Hong Kong Stock Exchange's building in February Photo: VCG

The Hong Kong Monetary Authority (HKMA) said that it will expand the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs at an opportune time, the Securities Times reported on Thursday. 

The comments came in response to a reported call to expand the quota of the Shenzhen-HK Stock Connect in the Guangdong Greater Bay Area's three-year plan, the HKMA told the Global Times on Thursday. 

The HKMA and relevant authorities in Shanghai and Shenzhen are closely watching the performance of the stock connect programs, their quota utilization levels and market conditions, and will consider what the next move might be needed to expand the quota system, read the HKMA statement. 

In May 2018, financial regulators in Hong Kong and the Chinese mainland quadrupled the daily quotas under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect schemes.

The increased daily quota for each of the northbound trading links will be 52 billion yuan ($7.56 billion) and 42 billion yuan for each of the southbound trading links.

Yao Changchun, a veteran Hong Kong stock investor based in Shenzhen, South China's Guangdong Province, told the Global Times on Thursday that transactions through the connect programs are lukewarm and there may be no need for any imminent expansion.

The current daily quota ranges in the billions of yuan, while the quota is set in tens of billions, according to Yao. "The point of having a quota system is that it is sought after by investors, which increases their passion to trade in the market."

South China's economic powerhouse Guangdong Province earlier this month announced a three-year action plan (2018-20) for the construction of the Guangdong-Hong Kong-Macao Greater Bay Area. The action plan details 100 concrete measures in nine major fields.

The Shanghai-Hong Kong Stock Connect was launched in November 2014 and the Shenzhen-Hong Kong Stock Connect was established in 2016. The links were created to improve the regulated trading environment and to open up Chinese markets to global investors.


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