Following the completion and deployment of the China-Hong Kong Stock Connect programme earlier this month, HKEx published the initial trading figures seen over the past 2 days since officially going live on November 17th, 2014.
Shanghai-Hong Kong Stock Connect is a securities trading and clearing links programme developed by Hong Kong Exchanges and Clearing Limited (HKEx), Shanghai Stock Exchange (SSE) and China Securities Depository and Clearing Corporation Limited (ChinaClear), aimed at liberalising mutual market access between the Mainland and Hong Kong.
Forex Magnates has tracked the progress of HKEx’s Stock Connect project and recently reported on the specific details of the programme. The China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (HKSFC) confirmed a go-live date for the long-awaited Stock Connect mutual market access program earlier this month, designed to connect securities trading in Hong Kong with mainland China.
Investors can trade certain stocks listed in Shanghai on the SSE designated as Northbound Trading, while Mainland investors (holding a minimum aggregate balance of 500,000 RMB or more in their securities and cash accounts) can trade certain Hong Kong listed securities via HKEx, designated as Southbound Trading.
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The largest Northbound participant was ‘Daqin Railway’ with 331,173,087 RMB total turnover including both buy and sell-side transactions. Ping An Insurance came in 2nd with 249,511,205 RMB and Saic Motor was 3rd with 224,307,921 RMB total turnover.
Southbound trading volume was over 25 times smaller than Northbound volumes. The turnover leader is Bosideng International, the largest down clothing company in China, with just under HK$20.9 million turnover. In a close 2nd is Tencent Holdings, an investment holding company whose subsidiaries provide mass media, entertainment, internet and mobile services, transacting HK$20.7 million. Semiconductor Manufacturing International, a semiconductor foundry company, transacted HK$18.4 million.
Stock Connect creates a dedicated channel for cross-border RMB flow and allows a broad range of investors to participate, effectively, a gateway between the West and the East. HKEx hopes to be at the epicentre of RMB activity as China continues to internationalise its currency. Hong Kong is likely to benefit from the uplift in market liquidity, the expansion of offshore RMB business and its overall solidified position as the gateway to the Mainland for the rest of the world.
Despite the seeming benefits, a ministry level think tank, the Chinese Development Research Center, has outlined some risks related to the launch of the Shanghai-Hong Kong Stock Connect because of the different trading systems used by both markets.