The China Securities Regulatory Commission (CSRC) will deepen its cooperation with Hong Kong on the basis of extensive and in-depth research and will adopt the following five measures to further expand and optimize the mechanism of the Shanghai/Shenzhen-Hong Kong Stock Connect, help Hong Kong consolidate its position as an international financial center, and jointly facilitate the collaborative development of capital markets in both sides of the boundary
First, the standards of eligible products for stock exchange-traded funds (ETFs) under the Stock Connect will be relaxed. Under the guidance of the commissions of the two places, the stock exchanges in Hong Kong, Shanghai and Shenzhen have reached a consensus to appropriately relax the average asset management size requirement for eligible equity ETFs, reduce the weighting of Hong Kong stocks and Hong Kong Stock Connect for southbound Hong Kong Stock Connect ETFs, and make reciprocal adjustments for northbound Shanghai Stock Connect and Shenzhen Stock Connect ETFs, so as to support the development of Hong Kong as an international asset management center.
Secondly, real estate investment trusts (REITs) will be included in the Shanghai/Shenzhen-Hong Kong Stock Connect. It is proposed to make general reference to the institutional arrangements for the interconnection and interoperability of stocks and ETFs between the two places, and include eligible REITs from the Mainland and Hong Kong in the Stock Connect, to further enrich the variety of products traded on the CSI/SSHK Stock Connect.
Thirdly, the inclusion of Renminbi (RMB) stock trading counters in the Hong Kong Stock Connect will be supported. Since the launch of the HKD-RMB Dual Counter Model in Hong Kong, stock exchanges and clearing houses in the Mainland and Hong Kong have been actively studying the incorporation of Renminbi stock trading counters into the Hong Kong Stock Connect, and a preliminary consensus has been reached on the relevant business plan. In the next step, both sides will continue to push forward various preparatory work such as improvement of the business plan, rule amendments, technical modifications, investor education, etc., in order to strive for an early launch and facilitate the internationalization of RMB.
Fourthly, the mutual recognition of funds will be optimized. The Commission intends to promote the appropriate relaxation of the restriction on the proportion of mutual funds to be sold away from Hong Kong, and allow Hong Kong's mutual funds to delegate their investment management functions to overseas asset management institutions in the same group as the managers, to further optimize the mutual recognition arrangements and better meet the diversified investment needs of investors in both places.
Fifthly, supporting the listing of leading Mainland enterprises in Hong Kong. In the past year since the promulgation and implementation of the information system for the filing-based administration of the overseas offering and listing of domestic enterprises, 72 enterprises have completed the filing of initial public offerings (IPOs) in Hong Kong, and the financing channels for listing in Hong Kong have been opened up, which has provided strong support for mainland enterprises to utilize the two markets and two kinds of resources to optimize their development. The CSRC will further strengthen its communication and coordination with relevant departments to support qualified leading mainland enterprises to list and raise capital in Hong Kong.
As a next step, the CSRC will work with the Hong Kong Securities and Futures Commission (SFC) and other relevant parties, and provide guidance to the exchanges and clearing houses of the two places to jointly promote the early and stable implementation of the above policy initiatives.
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