Yesterday, the Shanghai Stock Exchange (SSE) held a sum-up symposium to mark the first anniversary of the Shanghai-Hong Kong Stock Connect. Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission (CSRC), attended the symposium and delivered a speech, and Gui Minjie, SSE Chairman of the Governors, also addressed the symposium. Fang said that on the basis of the existing practical experience, the CSRC would strive to improve the Shanghai-Hong Kong Stock Connect, expand the trading limits and the underlying scope, further strengthen cross-border regulatory cooperation and step up efforts in cross-border law enforcement. Meanwhile, the CSRC would effectively carry out the mutual recognition of funds in China’s mainland and Hong Kong, continue to advance the Shenzhen-Hong Kong Stock Connect, and further push forward the integration of the two capital markets in China’s mainland and Hong Kong. Gui said in his speech that the SSE would vigorously propel the process of the two-way opening-up of the capital market in China’s mainland, including optimizing and improving the mechanism of Shanghai-Hong Kong Stock Connect, press ahead with the smooth opening and stable operation of the China Europe International Exchange (CEINEX), spare no efforts in launching the international financial assets trading platform of Shanghai Free Trade Zone and study the launch of Shanghai-London Stock Connect.
Shanghai-Hong Kong Stock Connect records a total trading amount of RMB2.13 trillion in a year.
On November 17, 2014, the Shanghai-Hong Kong Stock Connect was launched with the opening gong sounded. Data show that as of November 16, 2015, the Shanghai-Hong Kong Stock Connect recorded a total trading amount of RMB2.13 trillion in its first year. Specifically, the Shanghai Stock Connect running 230 trading days traded RMB1.54 trillion, with RMB120.706 billion or 40.24% of the total limit used; the Hong Kong Stock Connect running 225 trading days traded RMB589.86 billion, with RMB92.148 billion or 36.86% of the total limit used.
It is noteworthy that the Shanghai Stock Connect posted a daily average trading amount of RMB3.834 billion in the first month after its opening, with the figure reaching RMB4.727 billion in October this year, an increase of 24%; the Hong Kong Stock Connect registered a daily average trading amount of RMB462 million in the first month after being launched, with the figure amounting to RMB1.727 billion in October this year, up by 240%. Meanwhile, in the whole year of operation, trading was recorded on all 569 underlying stocks in Shanghai Stock Connect and 295 underlying stocks in Hong Kong Stock Connect.
With regard to investors, a total of 121 securities dealers in the Hong Kong market participated in Shanghai Stock Connect, with institutional investors as the majority and individual investors the minority. On the other hand, a total of 94 securities dealers in China’ mainland were granted to trade through Hong Kong Stock Connect. Among the accounts permitted to trade via Hong Kong Stock Connect, most are individual investors, with the institutional investors in the minority.
Further promoting integration of the markets in China’ mainland and Hong Kong
Addressing the symposium yesterday, Fang said that as a major initiative of institutional innovation in the opening-up of China’s capital market, the Shanghai-Hong Kong Stock Connect is a significance milestone. With the full convertibility of the capital account yet to be achieved, the Shanghai-Hong Kong Stock Connect has significantly improved the efficiency of the capital flow for cross-border investments, provided the investors at home and abroad with a more convenient channel for investing in each other’s market, and effectively promoted the integration of the markets in China’s mainland and Hong Kong. Internationally, it is of groundbreaking significance to connect the two markets with remarkable differences in market structure and development degree, and make their operation stable and smooth. The initiative has also provided important experience for interconnectivity of other markets worldwide.
Regarding the "report card" for the first year operation of Shanghai-Hong Kong Stock Connect, Fang said that since its official launch, the Shanghai-Hong Kong Stock Connect has reported stable and orderly trading of stocks in general, with normal operation recorded in all processes such as transaction settlement, control of limits and foreign exchange. During the process, it has withstood the test of significant fluctuations on the capital markets in the world and China’s mainland, and achieved the expected goals. The Shanghai-Hong Kong Stock Connect has played an important role in improving the liquidity of A shares, the investors’ structure and the internationalization of RMB, consolidating the position of Hong Kong as an international financial center, and advancing the development of Shanghai as an international financial center.
He further pointed out that in its next step, on the basis of the existing practical experience, the CSRC will strive to perfect the Shanghai-Hong Kong Stock Connect, expand the trading limits and the underlying scope, further strengthen the cross-border regulatory cooperation, and step up the efforts in cross-border law enforcement. Meanwhile, it will effectively carry out mutual recognition of funds in China’s mainland and Hong Kong, continue to push forward the “Shenzhen-Hong Kong Stock Connect”, and further enhance the integration of the two markets in China’s mainland and Hong Kong. It is necessary for the securities industry in China’s mainland to continue to learn from the experience of Hong Kong in market orientation, internationalization, rule of law and other aspects.
Fang stressed that President Xi Jinping recently said that we should unswervingly improve the opening-up system and mechanism and make efforts in mutual advancement between expanding opening-up and deepening reform. At present and during the “13th Five-year Plan” period, the main tasks in China’s economy is adjusting the structure and advancing the reform in supply, with the focus on reducing costs, improving quality and increasing effective supply. It is also the main problem for the capital market to solve. In the increasingly globalized world, it has been impractical to improve ourselves with the door closed, and we must adjust the structure with our door opened. In its next step, the CSRC will, in accordance with the deployments of the CPC Central Committee and the State Council, on the basis of the national conditions and current situations, with an eye to the future and the world, continue to unswervingly push forward the two-way opening-up of the capital market, direct the securities and futures industry to make improvement and compete in an orderly way, and boost the prosperity of the industry and the market, in a bid to support the restructuring, transformation and upgrading of China’s economy and facilitate the accomplishment of overall arrangement for China’s diplomacy.
Actively advancing the two-way opening-up of the capital market in China’s mainland
Summarizing the basic characteristics of the first year operation of the Shanghai-Hong Kong Stock Connect, Gui said that since its launch, the Shanghai-Hong Kong Stock Connect has operated steadily and orderly in the past year generally, meeting the expected goals for the pilot. The main characteristics include brisk trading, stable operation and active participation. With smooth opening and stable operation, the Shanghai-Hong Kong Stock Connect has reached the expected goals and achieved initial success, which is of great significance. First, it has improved the vitality and influence of the capital markets in China’s mainland and Hong Kong; second, it has advanced the process of RMB internationalization; third, it has promoted and consolidated the positions of Shanghai and Hong Kong as international financial centers; fourthly, it has created the new trend of interconnectivity between exchanges.
Talking about “optimizing and improving the Shanghai-Hong Kong Stock Connect, and vigorously advancing the process of two-way opening-up of the capital market in China’s mainland”, Gui said that recently, the 5th Plenary Session of the 18th CPC Central Committee worked out the proposals for the “13th Five-year Plan”, the “40 provisions on financial reform” in Shanghai Free Trade Zone and other important documents, and President Xi Jinping and Premier Li Keqiang made specific requirements for the development of the capital market on different occasions. According to general judgment, there will be abundant opportunities for reform, innovation and opening-up in a period at present and in the future. The SSE will firmly seize the historic opportunities, further improve the internationalization of the SSE market and speed up the two-way opening-up of the capital market in China’s mainland. First, on the basis of summing up the first year operation, the SSE will vigorously optimize and improve the Shanghai-Hong Kong Stock Connect, and give better play to its demonstration effect as the interconnectivity model for exchanges in the same time zone; second, the SSE will be active in advancing the smooth opening and stable operation of the CEINEX, which is co-founded by the SSE, Deutsche Borse and the China Financial Futures Exchange (CFFEX), so as to explore new ways and paths for the internationalization of the capital market in China’s mainland; third, the SSE will spare no efforts in launching the international financial assets trading platform of Shanghai Free Trade Zone, so as to adapt to the demands of the investors at home and abroad and improve the trading rules and trading mechanisms on the basis of learning the experience in the Shanghai-Hong Kong Stock Connect; fourthly, the SSE will energetically implement the achievements made at the meeting of the heads of China and the UK, study the launch of the Shanghai-London Stock Connect and, explore the new modes of cooperation for interconnectivity of exchanges in different time zones.
FTSE Mondo Visione Exchanges Index:
Shanghai-Hong Kong Stock Connect Records Safe, Sound Operation In 1st Year
Date 19/11/2015