This second cross-border trading link, after the launch of Shanghai-Hong Kong pilot program on 17 November 2014, is widely speculated to kick off later this month. The Shenzhen Stock Exchange said it is co-organising the fifth full-scale test this Saturday.
A total of 118 institutions in the mainland have been approved to trade via the scheme, including insurers and some asset management arms of brokerages, according to an unnamed source cited by the state-run China Securities Journal.
Meanwhile, at least 39 mutual funds with a “Shanghai-Hong Kong-Shenzhen” investment theme have been launched, according to a report by Xinhua News Agency.
They include products from Bosera, China Merchants Fund, China Southern Asset Management and many more. First Seafront Fund, based in Qianhai, Shenzhen, has introduced seven mutual funds related to this theme.
As of September this year, the 37 “Shanghai-Hong Kong-Shenzhen”-themed mutual funds have gathered about RMB 30bn ($4.37bn) of assets, said a report by China Fund News, another state-run publication under the People’s Daily.
Tianhong AM, an affiliate of Alibaba known for its money market fund Yu’ebao, is selling seven mutual funds to retail investors, but only the Zeal Voyage China Fund, a Hong Kong-domiciled mutual fund under the Mutual Recognition of Funds scheme, has an overseas focus, according to its website.
The authorities have not issued new QDII quota, a key channel for onshore institutions to invest in offshore markets, since March 2015. The new trading link aims to serve as an alternative way for mainland investors to diversify amid a weakening RMB.
The link-up of Shenzhen’s market to the existing Stock Connect “is not a shock to the system – it has been well trailed, but should be seen as part of the ongoing financial infrastructure build in China,” said Mark Tinker, head of Framlington Equities Asia, in a research note.
“The combined Hong Kong, Shanghai and Shenzhen exchange will then be the largest in the world by volume,” he added.
