SFC welcomes CSRC’s announcement of five measures on capital market cooperation with Hong Kong

The Securities and Futures Commission (SFC) welcomes the five measures announced by the China Securities Regulatory Commission (CSRC) today to further enhance the Stock Connect and to support Hong Kong’s strengthening of its status as an international financial centre.

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

The announcement came following the recent issuance of the State Council’s guideline 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.

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.

“We are delighted that the joint efforts of the two securities regulators now bear 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,” said Ms Julia Leung, SFC’s Chief Executive Officer.

“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, in particular, its support for leading Mainland companies to list in Hong Kong. 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. Further details will be announced in due course.