New measures boost capital markets access between China and Hong Kong

Chief Executive John Lee said the measures are vital in improving Hong Kong’s financial markets.

The China Securities Regulatory Commission (CSRC) has rolled out measures that will expand the mutual access between the capital markets of Hong Kong and Mainland.

The measures include expansion of the eligible product scope of equity exchange-traded funds (ETFs) under Stock Connect; inclusion of real estate investment trusts (REITs) under Stock Connect; supporting the inclusion of the renminbi stock trading counter under the Southbound trading of Stock Connect; enhancing the arrangements for mutual recognition of funds; and encouraging leading enterprises of industries in the Mainland to list in Hong Kong.

Chief Executive John Lee said the measures will support the development of Hong Kong's financial markets, increase the number of investment products, provide more investment opportunities to domestic, Mainland, and overseas investors, and enhance Hong Kong's status as an offshore RMB business centre.

Financial Secretary Paul Chan said these will strengthen Hong Kong’s role in connecting the Mainland and international capital markets, improve its performance to attract capital and high-quality enterprises, enrich the asset allocation options for Mainland and international investors, and provide more investment options for offshore RMB.

The support for top Mainland enterprises to list in Hong Kong will benefit its initial public offering market, whilst the increase of listed companies with long-term growth and return potential will boost the secondary market, he added.

“The further expansion of product coverage under mutual market access will broaden investment options for domestic, Mainland and overseas investors and facilitate their asset allocation. This will attract more capital to the Mainland and Hong Kong markets and benefit long-term market development,” Chan said.

He also pointed out that allowing Mainland investors to trade Hong Kong stocks using RMB through the Southbound trading of Stock Connect will enhance the investment function of RMB offshore.

Hong Kong, for its part, will expedite supporting measures, including waiving the stamp duty payable on the transfer of REIT units, extending the Grant Scheme for Open-ended Fund Companies & Real Estate Investment Trusts, and enhancing the regulatory regime for collective investment schemes and REITs.

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