China Securities Regulatory Commission (CSRC) in Beijing Photo:VCG

 
The China Securities Regulatory Commission (CSRC) on Friday announced five measures, which are to be implemented jointly with the Hong Kong Special Administrative Region (HKSAR), in a bid to further enhance the Stock Connect and to support the city's strengthening of its status as an international financial center.

The measures are part of the central government continued support for the HKSAR to maintain its unique advantages of being an international financial center, according to the notice. It also aims to jointly promote the coordinated development of the capital markets of both the mainland and the HKSAR.

Stock Connect allows qualified mainland investors to access eligible Hong Kong shares as well as Hong Kong and overseas investors to trade eligible A shares, boosting financial integration and development.

Specifically, the measures include: expanding the scope of eligible exchange-traded funds (ETFs) under the Stock Connect; incorporating real estate investment trusts (REITs) into the Stock Connect; supporting the inclusion of yuan-denominated stocks into southbound Stock Connect; enhancing the scheme of mutual recognition of funds; and supporting the listing of leading mainland companies in Hong Kong.

Under the guidance of the securities regulatory authorities in both regions, the Shanghai and Shenzhen stock exchanges have reached a consensus to moderately relax the average asset management scale requirements for qualified stock ETFs, the notice read.

The measure proposed to include mainland and Hong Kong qualified REITs into the Shanghai-Shenzhen-Hong Kong Stock Connect program, further enriching the variety of securities available for trading through the program, according to the notice.

Since the introduction of the dual counter mechanism for the Hong Kong dollar and yuan, exchanges and clearinghouses in mainland and HKSAR have actively explored the inclusion of yuan-denominated stocks in the Stock Connect program. Currently, required business plans have preliminarily reached a consensus.

The next step for both parties is to continue advancing preparations, including refining business plans, revising rules, implementing technological upgrades, and conducting investor education, with the aim of launching as soon as possible to support the internationalization of the yuan.

The new measure also proposes promoting the moderate relaxation of the proportion limit for cross-border sales of mutual recognition funds. These efforts aim to optimize the arrangement of mutual recognition fund in order to better meet investment needs on both the mainland and the HKSAR.

Since the implementation of the rules governing the overseas listing filing management system one year ago, 72 companies have completed their filing to go public in Hong Kong, paving the way for streamlined financing channels for listings in the city.

This has effectively supported mainland companies utilizing resources in both markets in a standardized manner to accelerate their own development.

The Securities and Futures Commission (SFC) of the HKSAR welcomed the five measures announced by the CSRC to further enhance the Stock Connect and to support Hong Kong's strengthening of the city's status as an international financial hub.

The new measures announced by the CSRC came following the recent issuance of guidelines by the State Council, China's cabinet, in promoting the high-quality development of the capital markets, strengthening regulation and forestalling risks.

The consensus on these initiatives also came after rounds of discussions between the CSRC and the SFC.

The mainland and Hong Kong stock exchanges and clearing houses, under the guidance of the two securities regulators, have also had extensive communications and are actively working on the implementation details, according to the SFC.

The SFC is pleased to note that the Hong Kong Exchanges and Clearing Limited has reached an agreement today with Shanghai Stock Exchange and Shenzhen Stock Exchange to expand the scope of eligible ETFs under Stock Connect which will further enrich investment options for investors in both markets, a statement read.

In addressing the new measures, Julia Leung, SFC's CEO expressed the satisfaction that the joint efforts of the two securities regulators now bearing fruit with several mutual market access schemes seeing significant breakthroughs. 

"We believe the expansion of the Stock Connect and the enhancements of the mutual recognition of funds will enrich product choice for Mainland and international investors, thus enabling Hong Kong to better leverage its unique role and advantages in the high-quality opening-up of the country's capital market," Leung said.

"We are also grateful for the CSRC's continuous efforts in facilitating a smooth fundraising channel for mainland companies to seek listing in Hong Kong," Leung said, noting that this will enhance the attractiveness of Hong Kong's IPO market and the liquidity of the secondary market.

The SFC will continue to work with the CSRC to provide guidance to the industry, the stock exchanges and clearing houses on the early implementation of these measures, the SFC said.

Global Times