Hong Kong Exchanges and Clearing (HKEX) announced jointly with the Shenzhen and Shanghai stock exchanges that they have reached an agreement to include eligible ETFs in the stock connect scheme.
“The inclusion of ETFs will provide investors with more options by broadening the existing connect product ecosystem as well as support the continued development of both markets,” said the HKEX in a statement.
The agreement reflects the commitment by HKEX and its mainland partners to continue expanding and enhancing the mutual market access programme between the capital markets of mainland China and Hong Kong, the statement adds.
The three exchanges and the China Securities Depository and Clearing Corporation will work closely on the details of inclusion, including business and technical preparations such as amendments to relevant rules in the coming months.
The stock connect scheme between Hong Kong and Shanghai was launched in 2014, followed by the Hong Kong-Shenzhen scheme two years later.
Last month, China proposed to expand the existing Shanghai-London stock connect programme to eligible listed companies in Shenzhen, Switzerland, and Germany.
Separately, the Shenzhen Stock Exchange and the Singapore Exchange have signed a memorandum of understanding (MOU) to establish an ETF product link for eligible fund managers to offer ETFs to investors in each other’s markets.
Through feeder ETFs, which link locally listed ETFs to ones listed on the other exchange, the agreement allows domestic fund issuers to tap cross-border capital flows, and investors to access overseas-listed ETFs via domestic exchanges, according to the Singapore Exchange.
“The [ETF Connect] will further deepen China-Singapore capital market product cooperation and accumulate experience for cross-border product connectivity enhancement,” said the Shenzhen bourse in a statement.
Singapore will become the third exchange to set up a cross-border trading link with mainland stock exchanges after Hong Kong and London.
As of the end of November 2021, Singapore-listed ETFs crossed S$12bn ($8.9bn) in AUM with 35 products across asset classes. Meanwhile, the Shenzhen exchange currently lists 212 ETFs with a combined market capitalisation of $39bn.