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China Focus: Shanghai-HK Stock Connect steady in first year

Xinhua, November 17, 2015 Adjust font size:

Shanghai-Hong Kong Stock Connect has operated steadily since its launch a year ago, despite the crisis in the mainland's stock market last summer.

Shanghai stocks have attracted 121 billion yuan (19.73 billion U.S. dollars) through this investment channel, about 40 percent of the 300-billion-yuan aggregate quota, and the investment produced a trade volume of 1.538 trillion yuan, according to the Shanghai Stock Exchange.

Hong Kong stocks have attracted 92.4 billion yuan through the program, about 37 percent of the 250-billion-yuan annual quota, and the investment produced a trade volume of 742 billion Hong Kong dollars (95.74 billion U.S. dollars), according to Hong Kong Exchanges and Clearing Limited (HKEx).

"But the focus should not be on aggregate quota usage or trading turnover, because Stock Connect is much bigger than that: it's a catalyst, and a model, for the future," said Charles Li Xiaojia, CEO of HKEx, on the first anniversary of the program.

"It unlocked a door to the Chinese mainland, and in future will likely be seen as the precursor to a new generation of cross-border regulatory cooperation and market connections," he added.

Shanghai-HK Stock Connect provided a model which can be copied in the future for the internationalization of the Chinese capital market, said Huang Hongyuan, general manager of the Shanghai Stock Exchange.

Its performance may pave the way for the anticipated Shenzhen-HK Stock Connect.

But the HKEx said that it has not reached any agreement on the establishment of the Shenzhen-HK Stock Connect.

The announcement came after central bank governor Zhou Xiaochuan said in an article published on Nov. 3 that China will launch such a program within the year, which substantially propped up stocks both on the mainland and in Hong Kong.

The central bank said on Nov. 4 that Zhou's article was a speech delivered to central bank officials on May 27, before the start in mid-June of the stock market rout, which many analysts assumed would delay the launch of Shenzhen-HK Stock Connect.

There is still a lot of room for improvement in Stock Connect, in terms of new products, expanded quotas, enlarged stock eligibility criteria, said Li, adding that he is also excited about Shenzhen Connect, which will open up another Chinese mainland market for international investors.

China's A-share market on two bourses in Shanghai and Shenzhen is home to about 2,700 companies, with a combined value of about 51.97 trillion yuan on Tuesday, when the combined daily trading volume on the two exchanges exceeded 1.27 trillion yuan.

Before the launch of Shanghai-HK Stock Connect, A-shares traded in China were only available to foreign investors via two quota systems -- the 2003 Qualified Foreign Institutional Investor and 2011's Renminbi Qualified Foreign Institutional Investor. Endi