Posted inHong KongChina

Shanghai-Hong Kong ETF Connect opens for business

A pair of ETFs on Tuesday started trading under the cross-listing scheme between Shanghai and Hong Kong.
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Mainland Chinese investors were yesterday allowed to buy a Shanghai-listed feeder fund that channels their cash into the CSOP Hang Seng Tech Index ETF, which is listed on the Hong Kong stock exchange.

The Hang Seng Tech Index was introduced in July 2020, and is divided into six segments: healthcare, consumer discretionary, industrials, finance, information technology and others, with information technology accounting for almost 70% of market cap.

The CSOP product gives Mainland investors better access to Hong Kong-listed Chinese stocks such as Alibaba and Tencent.

Simultaneously, Hong Kong investors were given access to the Shanghai-listed Huatai-Pinebridge CSI Photovoltaic Industry ETF via a feed funded listed in Hong Kong.

The planning of the ETF Connect programme between Hong Kong and China has been underway since 2016, and was expected to launch in 2017, but was plagued by regulatory and technical issues It finally opened in October 2020.

Under the scheme, Mainland products must invest at least 90% of their assets in an ETF listed in Hong Kong; similarly, Hong Kong products have to invest at least 90% of their assets in an ETF approved by the China Securities Regulatory Commission.

The Shanghai Stock Exchange (SSE) will “step up globalisation efforts, and study the rollout of more channels for foreign investors to participate in China’s onshore market”, said Liu Ti, deputy manager of the bourse, in a statement.

Shanghai’s ETF market is about RMB 1trn ($157bn) in market capitalisation, which is the sixth largest in the world and second biggest in Asia, and number one in the region by trading volume, according to the statement.

The SSE launched an ETF connect programme with Japan in 2019, and in May it agreed to setting up a similar scheme with the Korean exchange.

Part of the Mark Allen Group.