On November 26th, Caixin reported (Editor: Tong Gu), HKEX held the second HKEX China Forum in Shanghai today. HKEX Group CEO Bonnie Chan Yi-ting stated in her speech that there is still great room for international investors to increase their investment in the mainland capital markets, and the Mutual Market Access Mechanism still has tremendous untapped potential.

Bonnie Chan Yi-ting stated that on November 17, 2014, the first phase of China's capital markets opening up in both directions, Shanghai-Hong Kong Stock Connect, was launched between Shanghai and Hong Kong, ushering in a new era of mutual market access between the mainland and Hong Kong capital markets. In the blink of an eye, the two places have welcomed the tenth anniversary of mutual market access, and just last week, a grand summit forum was held in Hong Kong to celebrate this important milestone.

She shared with everyone the achievements of the Mutual Market Access Mechanism over the past ten years and some recent developments of the Hong Kong Stock Exchange.

Achievements of the Mutual Market Access

Bonnie Chan Yi-ting stated that over the past decade, the Mutual Market Access Mechanism has been operating smoothly, with the investment scope continuously expanding from Shanghai-Hong Kong Stock Connect to Shenzhen-Hong Kong Stock Connect, then to Bond Connect and Cross-border wealth management connect. Services have been continuously optimized and upgraded, with trading activity constantly on the rise, bringing mutual benefits to both the Hong Kong and mainland markets.

Taking Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects as examples, as of the end of September this year, the cumulative turnover of Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect reached 177 trillion RMB over the past decade. In the first ten months of this year, the average daily turnover of Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Hong Kong Stock Connect reached 136.3 billion RMB, 43.9 billion HKD respectively, accounting for 7.3% and 17.2% of the total turnover of the mainland and Hong Kong stock markets.

Mutual Market Access has not only vigorously promoted the opening up of the mainland capital markets and the internationalization of the RMB, but also solidified Hong Kong's position as an international financial center and a super-connector.

Currently, the Shanghai-Shenzhen-Hong Kong Stock Connect has become the main channel for international investors to trade and hold A-shares in the mainland, with nearly 77% of foreign capital holding mainland stocks through this channel.

Regarding the Bond Connect, since its launch in 2017, the number of overseas investors entering the market has reached 830 within a few short years. The Bond Connect Northbound has also become the main channel for international capital to invest in the mainland bond market, with over half of international investors trading in the mainland bond market through the Bond Connect.

The success of the Mutual Market Access Mechanism is attributed to the strong support from the regulatory authorities of both regions, as well as the close collaboration with partners such as the Shanghai and Shenzhen Stock Exchanges, China Securities Depository and Clearing Corporation, Foreign Exchange Trading Center, Shanghai Clearing House, and the trust and cooperation of market participants from both regions.

On April 19 this year, the China Securities Regulatory Commission announced five capital market cooperation measures with Hong Kong, including further expanding the scope of eligible stock ETF products under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, including REITs in the Stock Connect, supporting RMB stock trading Counters being included in the Hong Kong Stock Connect, and supporting leading mainland industry companies to list in Hong Kong.

In July this year, the expansion of the ETF connect between Shanghai and Hong Kong has been successfully implemented. The preparations for other Mutual Market Access optimization measures are also in full swing. Currently, the Hong Kong Stock Exchange is closely cooperating with the Shanghai and Shenzhen Stock Exchanges on optimizing measures such as including REITs in the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, introducing block trading mechanisms, and RMB counters being included in the Hong Kong Stock Connect trading, hoping to implement them as soon as possible, providing more investment choices and convenience for domestic and foreign investors.

Recent reforms

In addition to optimizing the Mutual Market Access, the Hong Kong Stock Exchange has recently introduced a series of listing rule reforms and market reforms to enhance the vitality and international competitiveness of the Hong Kong market.

In the first half of this year, the market remained sluggish, making it challenging for technology companies to meet the market capitalization requirements in the Listing Rules. Therefore, in August this year, the Hong Kong Stock Exchange announced a short-term lowering of the market value threshold for special 18C technology companies seeking listing, and relaxed the independent third-party investment requirements for Special Purpose Acquisition Companies (SPAC) to conduct merger transactions. Just last month (October 30th), the first company to go public through a De-SPAC transaction was listed.

In September this year, the Hong Kong Stock Exchange officially implemented arrangements for normal market opening in adverse weather conditions. Previously, when Typhoon Signal No. 8 was hoisted in Hong Kong, the market would be suspended. Now, regardless of wind or rain, the Hong Kong market will open normally on trading days, and the shanghai-Hong Kong Stock Connect will also operate normally.

On October 18 this year, the Hong Kong Stock Exchange and the Securities and Futures Commission jointly announced further optimization of the timetable for the listing application approval process, making the approval process for listing more clear and definite. For companies already listed on the A-share market, if they meet certain conditions, they can enter a fast-track approval process when applying for listing on the Hong Kong Stock Exchange.

Through this series of listing reforms, the Hong Kong Stock Exchange has enhanced the efficiency of the Hong Kong market and its inclusiveness towards xinjingji companies, aiming to better serve the real economy and provide investors with more investment opportunities.

Recently, with the decline in interest rates and the introduction of a series of economic stimulus policies domestically, the Hong Kong market has shown many positive signals: turnover in the Hong Kong stock market, ETF market, and derivatives market including the shanghai-Hong Kong Stock Connect hit new highs in October; the new stock market has also significantly warmed up, with many large new shares listing successively, and many international long-term funds participating in the subscription of these new shares.

Bonnie Chan Yi-ting stated that looking ahead, as China's influence in the global economy and low-carbon transformation continues to rise, the China capital markets can provide greater investment opportunities for the world. There is still considerable room for international investors to increase their proportion of investments in the mainland capital markets. In this regard, the mutual access mechanism still has great untapped potential.

In the future, the Hong Kong Stock Exchange will continue to work closely with mainland partners and all market participants, continuously expand and optimize the mutual access mechanisms, enrich products and services, connect China with the world, and connect capital with opportunities.

Editor / jayden