Chinese mainland, HK agree to broaden eligible stock ETFs under Stock Connect program

China's three major stock exchanges, namely, the Hong Kong Exchanges and Clearing Limited (HKEX), the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE), agreed to expand the scope of eligible stock exchange-traded funds (ETFs) under the Stock Connect program, following China's unveiling of measures on Friday to boost cooperation between the capital markets of the Chinese mainland and Hong Kong.

The China Securities Regulatory Commission (CSRC) announced five measures on Friday to enhance Stock Connect, which consists of the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes, and to bolster Hong Kong's status as an international financial center.

The Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes, which were launched in 2014 and 2016, respectively, provide mainland and international investors with direct access to each other's stock markets.

According to the measures announced by the CSRC, the scope of eligible ETFs under the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes will be expanded. Additionally, Real Estate Investment Trusts (REITs) will be incorporated into the schemes, and support will be provided for the inclusion of yuan-denominated securities in southbound stock connect scheme trading. Furthermore, the CSRC will enhance mutual fund recognition and support the listing of leading mainland companies in the Hong Kong market.

Based on CSRC's optimization measures, the eligibility criteria for ETFs, including the assets under management requirement and the index weighting requirements, will be relaxed to support the continued development of Stock Connect, allowing more investors to allocate assets in both the Chinese mainland and Hong Kong in an efficient and cost-effective way. Related measures are expected to take effect about three months after the announcement.

"Since the inclusion of ETFs in Stock Connect, it has provided great convenience and many opportunities for cross-border investment for investors in both the Chinese mainland and Hong Kong. With the implementation of these five measures targeting Hong Kong's capital market, it is expected that the number and scale of stock ETFs in Stock Connect will significantly increase. This will further enrich investment options and facilitate asset allocation in each other's markets for investors. Additionally, these measures will enhance Hong Kong's position as a global financial center and promote the coordinated development of capital markets in both the mainland and Hong Kong," said Zhao Yue, chief economist of Hong Kong-based Chief Securities.

Chinese mainland, HK agree to broaden eligible stock ETFs under Stock Connect program

On his second official visit to China, Prime Minister of the Republic of Vanuatu Charlot Salwai expressed admiration for China's remarkable ability to balance preserving its cultural heritage with embracing innovative transformation.

Salwai paid an official visit to China from July 7 to 12. During his trip, he toured the southern province of Guangdong and explored the megacities of Beijing and Shanghai. His visit included tours of high-tech companies, a ride on a high-speed train, and a performance of traditional Cantonese opera.

In an interview with China Central Television Network (CCTV) aired on Friday, Salwai recounted his journey starting with a warm welcome that included enjoying Beijing Roast Duck, also known as Peking Duck -- a culinary delight introduced to him by the Chinese ambassador in Vanuatu.

"Many had to say. Peking Duck. Because we had it here on our arrival, so it was very tasty. And I understand that the Chinese ambassador in Vanuatu brought us to one of the traditional restaurants, small but beautiful," he said. The prime minister sees China's preservation of its culture as a vital lesson in understanding one's roots and the journey to the present day, acknowledging China's efforts to integrate cultural preservation with modernization.

"It's going to be my second official visit to China. I'm always impressed to see big changes and especially innovations made by China and especially the cities. Because a big impression is to see how China continues to maintain and keep its culture. Because I think it's the basis of everything -- to know where you come from and to understand where we are today. I feel that China is doing a lot to maintain its culture, but at the same time, doing, innovating to transform its culture,” Salwai said.

He also emphasized the importance of learning from China's sustainable development strategies.

"Today, it comes from a long way, some hardship, the government, and also the people of China. So, I'm impressed to see what is done, especially how China associates infrastructure development with nature. That's meant to keep, continue to keep the environment. It takes effort with the climate change by maintaining the ecosystem. I think it's something that, for a small country like Vanuatu, is important to learn. So, we are here. I'm here with my delegation to learn," Salwai said.

Vanuatu's PM commends China's cultural preservation, innovation amid fast growth