Overseas equity investments surge dramatically as Shenzhen-Hong Kong Stock Connect reaches two years old

Source:Cfbond 2018-12-06 20:22

By Xie Fang

As one of the pillars to the opening-up of China's capital market, the project of Shenzhen-Hong Kong Stock Connect reached its second birthday on Wednesday, the Shanghai Stock Exchange reported.

After two years of smooth operations, the project has become a crucial bridge between China's A-share market and overseas investors.

Data from the Shenzhen Stock Exchange (SZSE) shows that, as of Dec. 5, the two-way stock trading volume through the Shenzhen-Hong Kong Stock Connect had hit 4.15 trillion yuan (603 billion U.S. dollars) in total.

More specifically, the SZSE saw a total of 2.87 trillion yuan (417 billion U.S. dollars) worth of shares traded through the project over the past 467 trading days, with its average daily trading volume growing more than five-fold to 9.63 billion yuan (1.4 billion U.S. dollars).

The Hong Kong Exchanges (HKEX) also reached a trading volume of 1.28 trillion yuan (186 billion U.S. dollars) coming from the project during the past 458 trading days, with its average daily trading volume more than quadrupled to 2.63 billion yuan (382 million U.S. dollars) over the period.

Since the beginning of this year, the Shenzhen-Hong Kong Stock Connect has grown more appealing to overseas capital after the SZSE raised the upper limit of the daily trading volume through the project and strengthened its regulatory mechanism.

On May 31, for example, the internationalization of the Chinese stock market hit a significant milestone as the New York-based world-leading stock index compiler Morgan Stanley Capital International (MSCI) included the A-share stocks into its emerging markets index.

Three months after that landmark event, the average trading volume through the Shenzhen-Hong Kong Stock Connect saw an increase of nearly 10 percent.

By the end of Dec. 5, there was a total of 21 SZSE-listed companies which had seen more than 5 percent of their outstanding shares held by overseas investors compared with only nine stocks a year ago.

RECOMMENDED