A staff member walks past the Shenzhen Stock Exchange in Shenzhen, south China's Guangdong Province, Sept. 21, 2020. (Xinhua/Mao Siqian)
BEIJING, March 10 (Xinhua) -- The capital markets of the Chinese mainland and Hong Kong Special Administrative Region (SAR) will see the expansion of eligible stocks under the Stock Connect program from March 13.
After the expansion, the number of stocks eligible for northbound trading will surge by 1,034 to 2,529, while the number of stocks eligible for southbound trading will increase to 560.
Experts said that the move is an important milestone in achieving the high-level institutional opening-up of China's capital market. It further broadens cross-border investment and financing channels, and provides investors at home and abroad unprecedented opportunities and direct access to Chinese and international stock markets.
-- Multiple options for investors under Stock Connect program
On March 3, Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange released implementation measures on expanding the range of eligible stocks in Shanghai/Shenzhen-Hong Kong Stock Connect program. Hong Kong Exchanges and Clearing Limited (HKEX) also launched similar measures on the same day.
After the expansion, the eligible stocks under the Shanghai Stock Connect will increase by 598 ones to 1,193 ones, with the market value coverage rate reaching 90.94 percent, while the eligible stocks under the Shenzhen Stock Connect will jump from 436 to 1,336, with the market value coverage rate growing to 86 percent.
The move will include more stocks of companies listed on the exchanges of the Chinese mainland and allow overseas investors to participate in the A-share trading, which is conducive to attracting long-term foreign capital into China's domestic market, said Gao Ruidong, chief macro economist at Everbright Securities.
Meanwhile, 12 stocks including four ones from foreign listed companies in Hong Kong will be brought into the Hong Kong Stock Connect, raising the total number of eligible stocks to 560.
The expansion will facilitate diversified investment and asset allocation for domestic investors and inject more liquidity into Hong Kong capital market, Gao added.
-- Optimized Stock Connect program to promote capital market development
Since the launch of the Stock Connect program, the capital markets of the Chinese mainland and Hong Kong have cooperated closely to explore the institutional opening-up of China's capital market.
A batch of measures and regulations have been rolled out to optimize the Stock Connect program, which greatly smooth the financing channels for both domestic and foreign investors and improve the institutional opening-up of China's capital market.
It is learned that the Stock Connect program has canceled the total quota and two-way expansion of daily quota, and successively included the stocks of companies with weighted voting rights (WVR), the stocks of biotechnology companies which have not yet made profits, the stocks of sci-tech innovation board (STAR market), and exchange traded fund (ETF).
The Stock Connect program has also launched investor identification code system, optimized the threshold of foreign shareholding ratio, regulated the return transactions of domestic investors, and improved the trading calendars.
Up to now, the cumulative transaction value of the northbound trading under the Stock Connect program has reached 94.74 trillion yuan, including 45.39 trillion yuan from the Shanghai-Hong Kong Stock Connect and 49.34 trillion yuan from the Shenzhen-Hong Kong Stock Connect.
For southbound trading, the cumulative transaction value amounted to 27.98 trillion yuan, including 15.80 trillion yuan from Shanghai-Hong Kong Stock Connect and 12.18 trillion yuan from Shenzhen-Hong Kong Stock Connect.
-- China to achieve higher-level of institutional opening-up
In recent years, China has implemented measures to mull a higher-level of institutional opening-up in the capital market.
Dong Dengxin, director of the Institute of Finance and Securities of Wuhan University of Science and Technology, said that the inclusiveness in opening-up of China's capital market is gradually increasing.
In addition to the continuously optimized and perfected Stock Connect program, China has been actively broadening the financing channels for overseas listing, promoting the overseas issuance of global depository receipts (DGRs), and boosting the international operation of A-share listed companies.
Meanwhile, China's A-shares have been included in MSCI, FTSE Russell, S&P Dow Jones and other international indexes, and the proportion of inclusion has been increasing.
In addition, China-Japan ETF Connectivity, and ETF trading under the Stock Connect program have been launched, the scope of specific varieties of futures and options has been expand and the number of panda bonds issued by high-quality enterprises has shown growing trend.
(Edited by Tian Shenyoujia with Xinhua Silk Road, tianshenyoga0524@163.com)
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