An agreement between four of the Asia-Pacific’s largest financial regulators has finalised a scheme to boost the flow of stock market activity between Hong Kong and the Chinese city of Shenzhen.
Set to launch in the second half of November, Shenzhen-Hong Kong Stock Connect (Shenzhen Connect, for short) aims to bridge those territories through improved mutual market access.
That will enable investors based in the Mainland city and the Special Administrative Region to more easily buy and sell shares listed on each other’s markets.
The venture builds on previous work to enhance cooperation between Hong Kong and China’s markets via the similar Shanghai Connect scheme, launched in November 2014.
Regulators who completed the Four-party Agreement to finalise Shenzhen Connect were:
SZSE president Wang Jianjun explained: “The stock eligibility criteria of Shenzhen Connect highlight the multi-tiered, multi-product characteristics of Shenzhen Stock Exchange.
“The eligible stocks include constituents of the SZSE Component Index and SZSE Small/Mid Cap Innovation Index, as well as SZSE-listed A shares of A+H companies.”
Those assets, he added, “share the features of wide market capitalisation coverage and high market representativeness. The valuation and market value of these eligible stocks are quite similar to those of Shanghai Connect.
“The companies have sound business performance and good growth potential. The sectoral distribution of eligible stocks also reflects SZSE’s position as a marketplace for emerging industries.”
ChinaClear general manager Dai Wenhua said: “The signing of the Four-party Agreement is a new starting point to further and deepen our cooperation.
“As an important financial market infrastructure supporting the Stock Connect programme… ChinaClear will continue to optimise its risk management and emergency mechanism to provide safe, convenient and efficient depository and clearing services, and will support the smooth implementation and operation of Shenzhen Connect.”
HKEX chief executive Charles Li noted: “Stock Connect gives us a model for mutual market access beyond equity, and we continue to work on breakthroughs in other asset classes to offer the market more flexibility, more products and more opportunities.
A series of international roadshows to promote the scheme began on 13 October. They will reach leading institutional investors in North America and Europe later this month.