HKEX Announces Addition of ETFs to Stock Connect

Hong Kong Exchanges and Clearing Limited (HKEX) recently announced that it has reached an agreement with Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Corporation (CSDC) to add ETFs to the Stock Connect.

According to HKEX, the agreement is based on a previous joint announcement by the Securities and Futures Commission (SFC) and China Securities Regulatory Commission (CSRC). It reflects the ongoing commitment by HKEX and its Mainland partners to continue expanding and enhancing the landmark mutual market access programme between the capital markets of Mainland China and Hong Kong.

Stock Connect is a platform designed to allow international and Mainland Chinese investors to trade securities in each other's markets through the trading and clearing facilities of their home exchange, providing an opportunity for international market participants to gain exposure to Mainland China and its fast-growing emerging economy. ETFs are a low cost investment option and a popular choice for diversification. The inclusion of ETFs is a key enhancement of Stock Connect, which will provide investors with more options by broadening the existing Connect product ecosystem as well as support the continued development of both markets. 

Next, HKEX, SSE, SZSE and CSDC will work closely on the details of inclusion, including business and technical preparations such as amendments to relevant rules. It is estimated that the preparation work will take approximately six months to complete.

"The addition of ETFs to the Connect franchise is a new and exciting milestone in the highly successful mutual market access programme between Hong Kong and Mainland China's capital markets. This reflects Hong Kong and HKEX's pivotal role as Asia's international financial centre of choice, and we are delighted to be adding more diversified products to the existing Stock Connect and Bond Connect platforms," said Nicolas Aguzin, HKEX Chief Executive Officer.

​HKEX has reportedly launched the first MSCI China A 50 Connect Index ETFs earlier this month and added six new stock futures contracts and stock option classes ​most recently.