WIKIFX REPORT: ETF Connect to Unite ETFs Listed on Hong Kong and mainland China Exchange

More than 80 Shanghai and Shenzhen-listed ETFs can now be traded via the northbound Stock Connect route. ETF connect is a new trading system to bring together ETFs traded on Hong Kong and mainland China exchanges. The platform will be integrated into an already existing Stock Connect infrastructure. It was launched on 4th July.

Investors in mainland China and Hong Kong began trading exchange traded funds across each others markets this week, with strategies from the mainland far outnumbering their Hong Kong-listed counterparts.

Under the new cross-border trading scheme, which debuted on the first trading day after the 25th anniversary of the handover of Hong Kong on July 1, 83 mainland-listed ETFs, including 53 in Shanghai and 30 in Shenzhen, can now be traded by international investors via the northbound Stock Connect route, compared with only four Hong Kong-listed ETFs during the initial stage. As of the end of June, the 83 ETFs ran a combined Rmb674.6bn ($100.4bn) in assets, Wind data show, accounting for nearly 70 per cent of the mainland ETF market.

Twenty Chinese managers account for all 83 ETFs, according to the latest list of eligible securities published by Hong Kong Exchanges and Clearing.

It was developed as a crucial milestone and a tool to expand the existing stock trading system. Experts believe it is going to encourage the growth of Hong Kong as a new ETF hub. It will be used to connect the global capital with the mainland.

How ETF Connect Will Catalyze Stock Trading

The launch of the system will keep all mainland funds open and easy to access by not only Hong Kong but also global individual and institutional traders. The main mission is to help Hong Kong and China mainland markets to develop and promote their capital overseas.