Investor activity has surged in the first month since ETFs listed on both the Hong Kong and mainland China exchanges were included in the existing Stock Connect scheme.
The Hong Kong stock exchange (HKEX) announced that the average daily turnover of the eligible Northbound ETFs traded through Stock Connect was RMB19.8m, while the Southbound daily turnover volume was almost 11 times more.
This reflects “mainland investors’ strong demand for Hong Kong-listed ETFs,” said the exchange.
Despite the interest, however, as at the end of July, only four funds listed in Hong Kong were included on the list for mainland investors.
They are: CSOP Hang Seng TECH Index ETF; iShares Hang Seng TECH ETF; Hang Seng China Enterprises Index ETF; and Tracker Fund of Hong Kong.
Meanwhile, Hong Kong and international investors can buy 83 mainland-listed ETFs, including 53 in Shanghai and 30 in Shenzhen.
The eligible Northbound ETFs include those related to consumer products, technology and ESG.
Offshore investors can also invest in pure-play industry ETFs such as agriculture, rare earth industry and national defence, said HKEX.
“The inclusion of ETFs in Stock Connect provides issuers with an additional channel to tap into the savings of Chinese households, creating favourable conditions for even more new ETF listings that will add to the vibrancy of Hong Kong’s ETF market,” said HKEX in a statement.
“Also taking into consideration the expanding investor base, Hong Kong’s markets are set to become even more liquid and diverse,” it added.
By the end of June, the aggregate assets under management of Hong Kong-listed ETFs reached a record high of HK$443bn, with year-to-date average daily turnover of HK$11.8bn, up 55% year-on-year.
The exchange believes the inclusion of ETFs in Stock Connect is the first step in introducing more mainland investors to Hong Kong’s ETF market, which is an exciting new phase in the city’s position as Asia’s ETF marketplace.