The Stock Connect program linking the Shanghai and Hong Kong stock markets, which launched on November 17, 2014, has significantly transformed investment dynamics between the two regions. Initiated by Charles Li Xiaojia and Gui Minjie in December 2012, the program has facilitated over 1.8 trillion yuan (approximately US$249.2 billion) in foreign investments and 3.4 trillion HKD (around US$437.2 billion) in mainland investments. This initiative has led to a remarkable increase in foreign holdings of Chinese stocks, which have surged over 20 times since the program's inception. As of September 2024, foreign investors held 2.4 trillion yuan worth of Chinese stocks, with 2,700 stocks in Shanghai and Shenzhen available for trading. Investors have seen a 60% return since the launch of Stock Connect, although this is slightly lower than the S&P 500's higher returns during the same period. [19ffe470]
In recent trading activities, there was a net inflow of HKD470.7 million in Southbound Trading to CHINA MOBILE (00941.HK), alongside net inflows of HKD297.2 million to CNOOC (00883.HK) and HKD107.5 million to MEITUAN-W (03690.HK). However, TENCENT (00700.HK) experienced a net outflow of HKD144.1 million. The most active stock with the highest net inflow in the Shanghai-Hong Kong Stock Connect was TRACKER FUND (02800.HK) with HKD933.9 million, while CHINA MOBILE had the highest net outflow of HKD56.4 million. In the Shenzhen-Hong Kong Stock Connect, CHINA MOBILE again led with a net inflow of HKD527.1 million, while TENCENT faced a net outflow of HKD607 million. Overall, the total net inflow in Southbound Trading at close was HKD8 billion, accounting for 36.57% of the total transaction amount of HKD42.51 billion. [762fae69]
The Northbound Trading also saw significant activity, with a net inflow exceeding RMB10 billion. This indicates strong interest from international investors in the Chinese stock market through the Stock Connect program. However, there was also a notable net outflow of over RMB10 billion from Northbound Trading, as reported by AASTOCKS Financial News. The article highlighted various factors affecting the market, including the performance of the Hang Seng Index (HSI), the decline in stocks like NIO and XPENG, and the European Union's introduction of temporary tariffs on Chinese electric vehicles. [e38cf1a4]
Financial regulators from the Chinese mainland and Hong Kong are enhancing the Swap Connect program to further open up China’s swap market to foreign investors. The enhancements include introducing features like IMM date-based interest rate swaps, compression services, and clearing of backdated contracts. Since its launch in May 2023, Swap Connect has facilitated over 3,600 transactions worth nearly 1.77 trillion yuan ($245 billion), significantly increasing foreign participation in China’s financial markets. The People's Bank of China, the Securities and Futures Commission of Hong Kong, and the Hong Kong Monetary Authority have jointly rolled out several enhancement measures for the scheme, aiming to attract more foreign investors to China's bond market. [de31a63e]