"Interconnectedness" celebrates its tenth anniversary, Chen Maobo: Hong Kong becomes the preferred destination for international trading of mainland financial products

On the 10th anniversary of the launch of the "Interconnection" between the financial markets in Mainland China and Hong Kong, on November 17, Hong Kong Financial Secretary Paul Chan Mo-po stated in his blog that over the past decade, the number of eligible stocks, as well as the daily trading volume of Hong Kong and mainland China stocks, has increased significantly. He described the "Interconnection" as an innovative system that promotes two-way capital flow between mainland China and the world, allowing international investors to invest directly in the mainland market through Hong Kong, and mainland investors to utilize Hong Kong for allocating overseas assets. Hong Kong has become the preferred destination for international fund allocation and trading in mainland financial products. Paul Chan Mo-po highlighted the achievements of the stock market "Interconnection" over the past decade: in terms of the number of eligible stocks, it has increased from over 800 through Shanghai-Hong Kong Stock Connect to over 3,300 through Shanghai-Shenzhen-Hong Kong Stock Connect, accounting for 90% of the total market value of listed companies in the three regions. Mainland investors trading Hong Kong stocks in the southbound direction reached an average daily trading volume of 38 billion yuan in the first three quarters of this year, a 40-fold increase compared to the first month of the Shanghai-Hong Kong Stock Connect in 2014, accounting for 16.9% of the total trading volume in the Hong Kong stock market. In fact, the southbound trading of Hong Kong stocks has become an important channel for mainland public funds, insurance funds, and pension funds to allocate overseas assets, with mainland investors holding assets through the Hong Kong Stock Connect exceeding 3.3 trillion Hong Kong dollars in market value. Foreign investors trading mainland Chinese stocks in the northbound direction reached an average daily trading volume of 123 billion yuan in the first three quarters of this year, a 21-fold increase compared to the first month after the launch ten years ago, accounting for 6.7% of the total trading volume in the mainland market. About 77% of the total value of mainland stocks held by foreign investors is through the "northbound trading" channel. Approximately two-thirds of the cross-border bond transactions by international investors are conducted through the "Bond Connect" program. Paul Chan Mo-po concluded that under the "Interconnection," Hong Kong has become the preferred destination for international fund allocation and trading in mainland financial products, and over the past decade, it has steadily deepened and expanded, significantly enhancing the liquidity and vitality of the Hong Kong capital market: the total market value of the Hong Kong stock market has reached 35 trillion Hong Kong dollars, an increase of about 40% over the past decade, 11 times the local GDP. Paul Chan Mo-po also proposed three main axes for further deepening the development of the "Interconnection": firstly, to continue developing the "Interconnection" as a link between the mainland and international markets, linking not only traditional Western markets but also emerging markets with large populations and rapidly growing economies and incomes; secondly, to continue promoting the deepening and expansion of the "Interconnection," allowing Hong Kong to play a better role as a "firewall," "experimental field," and capital leading platform in the process of opening and developing the national financial market, enriching product categories, and continuously promoting policy and product innovation under controllable risks; thirdly, to promote the internationalization of the Renminbi. He revealed that this week, the third "International Financial Leaders Investment Summit" will be held, with the theme "Navigating in Turbulent Times," with hundreds of senior executives from international financial institutions attending, including over 100 group chairmen or CEOs.