HKEX ETF Summit 2024 Highlights Growth and Opportunities in Hong Kong's ETF Market

Acting SFST's speech at HKEX ETF Summit 2024

Following is the speech by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, at the HKEX ETF Summit 2024 today (November 5):

Wilfred (Deputy Chief Executive Officer of Hong Kong Exchanges and Clearing Limited (HKEX), Mr Wilfred Yiu), Howard (Deputy Chief Executive of the Hong Kong Monetary Authority, Mr Howard Lee), Christina (Executive Director (Investment Products Division) of the Securities and Futures Commission, Ms Christina Choi), Eric (Executive Director (Policy) of the Mandatory Provident Fund Schemes Authority, Mr Eric Cheng), distinguished guests, ladies and gentlemen,

Good afternoon. It is my great pleasure to join you today at the HKEX ETF Summit 2024. First of all I would like to extend my gratitude to HKEX for organising this timely gathering where we can explore the vibrant landscape of ETF (exchange-traded fund) markets, particularly the emerging opportunities, in Hong Kong. This summit arrives at a crucial juncture for both Hong Kong and the broader Asia-Pacific region as we navigate the complexities of a rapidly evolving market environment.

Hong Kong's ETF market

Over the past decade, passive investments, especially ETFs, have experienced remarkable growth. These products have emerged as a vital tool, providing exposure to diversified asset classes and investment strategies, enabling investors to effectively diversify their portfolios. ETFs have become one of the fastest-growing investment products globally, fundamentally transforming how investors access financial markets and construct their investment strategies.

In response to this fast-growing ETF market, major jurisdictions worldwide, including Hong Kong, have been vying for the title of premier ETF hub. As a critical gateway to Mainland China, Hong Kong serves as a "super-connector" between Mainland China and the global markets. By leveraging its favorable tax, legal, and regulatory frameworks, Hong Kong has established itself as a leading player in the Asia-Pacific ETF market.

Since launching the first ETF in 1999, HKEX has become one of largest and most active ETF exchanges in Asia. The Government has actively supported the development of our ETF ecosystem, introducing a stamp duty waiver for secondary market transactions of ETFs in 2015 and expanding it to include primary market activities for ETF market makers in 2020. These initiatives have reduced transaction costs and enhanced Hong Kong's competitiveness as a listing venue. With robust policy support, Hong Kong now boasts a diverse range of ETF products backed by deep liquidity, attracting renowned issuers, market makers, and investors. In the first three quarters of 2024, the average daily turnover of ETFs reached HK$13.0 billion, up by 10 per cent from the average in full year 2023, and up by 32 per cent from the average in full year 2022 respectively.

Inclusion of ETFs under Stock Connect

The expansion of mutual stock market access between the Mainland and Hong Kong (Stock Connect) in July 2022 to include eligible ETFs has opened new avenues for trading. This initiative allows both Hong Kong and foreign investors to trade ETFs listed on the Shanghai and Shenzhen stock exchanges while enabling Mainland investors to access Hong Kong-listed ETFs. This development enhances the interaction between our capital markets, providing more diverse asset allocation options and promoting liquidity and sustainable growth.

In April 2024, the China Securities Regulatory Commission (CSRC) announced measures to further broaden mutual access between the Mainland and Hong Kong capital markets. These measures include, among others, expanding the range of eligible equity ETFs under Stock Connect by lowering criteria for Both Northbound and Southbound trading, which has led to the addition of 85 new Mainland ETFs and six new Hong Kong ETFs, bringing the total to over 240 eligible products in July this year. This expansion enriches investment options and facilitates efficient asset allocation for investors in both markets, attracting capital inflows and supporting long-term market development. With continuous enhancements, we are pleased to see that trading of ETFs under Stock Connect has been widely accepted by investors since its commencement.

Attracting foreign capital

Indeed, since we established Stock Connect in 2014, its Southbound trading has brought a net inflow of over HK$3.4 trillion to the Hong Kong stock market. Meanwhile, the Northbound trading has been an important avenue for international investors to access the Mainland market. Seventy per cent of the A-shares held by international investors were acquired via this channel. This unique connectivity Hong Kong enjoys is increasingly recognised and favoured by investors.

A year ago, we celebrated the listing of Asia's first ETF tracking the Saudi Arabian market in Hong Kong, allowing Asian investors to tap into the vast opportunities offered by Saudi Arabia and the Middle East. And just last month, we welcomed the listing of two ETFs tracking Hong Kong stocks in Saudi Arabia, completing a two-way capital flow conduit between our markets. These listings are significant on multiple levels: they provide Saudi and Middle Eastern investors direct access to the Hong Kong stock market, enhance the developing ETF market in Saudi Arabia, and diversify Hong Kong's capital sources while boosting market liquidity.

Diversifying product offerings

In addition to attracting foreign capital, we are committed to expanding our ETF ecosystem and enhancing product diversity in Hong Kong's markets, further supporting the city's position as the region's leading ETF marketplace by offering investors even more choice.

As Wilfred mentioned, the introduction of virtual asset spot ETFs is an exciting addition, providing investors access to new asset classes through ETFs. This year has also seen the debut of Hong Kong's first covered call ETFs, enabling investors to navigate volatile markets and hedge risks while diversifying beyond traditional products. We look forward to continuing working closely with our stakeholders with a view to launching more products to our international marketplace.

Closing

Ladies and gentlemen, I would like to express my gratitude to all stakeholders for your dedication in solidifying Hong Kong's status as a leading international financial centre and ETF hub. Together, let us explore pathways to greater innovation and collaboration. I wish the summit every success and wish you good health and business for the time to come. Thank you.

Acting SFST's speech at HKEX ETF Summit 2024 Source: HKSAR Government Press Releases

EDB reminds parents to choose primary schools under Central Allocation process for their children

The Education Bureau (EDB) today (January 12) reminded parents that children who have joined the Primary One Admission (POA) System for 2026 but have not yet secured a discretionary place can take part in the Central Allocation process for a Primary One (P1) place in a government or aided primary school. Parents concerned should make their choice of schools within the period from January 19 to 25.

Digitalisation of POA

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In line with the Smart Government strategy, the EDB has fully implemented digitalisation of the POA. Parents who have registered as POA e-Platform (ePOA) users and have bound their account to "iAM Smart+" may submit the Choice of Schools Form for Central Allocation from January 19 to 25 through the ePOA. Please refer to the related videos and Parent's Guide on the EDB's website (www.edb.gov.hk/en/edu-system/primary-secondary/spa-systems/primary-1-admission/poa_eplatform/index.html) for details of the procedures for activating and logging into an ePOA account and for making school choices for the Central Allocation of POA via the e-Platform.

Making school choices at Central Allocation Centres

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The EDB will send letters to parents on January 14 inviting them to make their choice of schools. To cater for the needs of different parents, parents can still submit the Choice of Schools Form in paper form by visiting the designated Central Allocation Centre at the suggested time slot (i.e. 9.30am to 12.30pm or 1.30pm to 4.30pm on January 24 (Saturday) or 9.30am to 12.30pm on January 25 (Sunday)) stated in the letter.

Parents who are ePOA users may choose to submit the Central Allocation Application via the ePOA or in paper form to the Central Allocation Centre but should not submit duplicate applications. Parents who have not yet received the letter by January 19 should call the School Places Allocation Section of the EDB (Hotline: 2832 7700) as soon as possible.

Only one parent of an applicant child is required to complete the school choice-making procedures. Parents are advised not to take their children to the Central Allocation Centre if possible. Parents who cannot make school choices within the suggested time slot can go to the designated Central Allocation Centre from 1.30pm to 4.30pm on January 25. The Choice of Schools Form will be sent together with the letter to parents who have submitted a paper Application Form at the Discretionary Places stage for filling out in advance.

In the event of adverse weather or other special conditions on any day during the period of making school choices, please pay heed to radio or television announcements on the relevant special arrangements.

Unable to submit application within specified choice-making period

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For individual parents who are unable to use the ePOA or go to the Central Allocation Centre to make school choices, they can authorise in writing a representative to bring the completed Choice of Schools Form and their signed Letter of Authorisation to the Central Allocation Centre to proceed with the related procedures.

To apply for POA 2026 for their children after January 25, parents need to complete necessary procedures with the School Places Allocation Section, which will separately arrange P1 places for the applicant children in June.

Change of residential address

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An EDB spokesman reminded parents that, if they have recently moved their residence or have such plans in the near future, they are required to inform the School Places Allocation Section as soon as possible so that they can make school choices in the POA School Net where their new home is located. Parents should fill in the actual residential address of their child. If they provide a false address for securing a P1 place, the POA application of their child will be rendered void and the P1 place allocated will be withdrawn.

The EDB has put in place a monitoring mechanism to verify the residential addresses of applicant children as given by the parents. Random checks have also been stepped up. The public may call the School Places Allocation Section to report suspected cases of using a false address by parents for their children's POA application. The EDB will take action against false address cases.

Mechanism of Central Allocation

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Central Allocation is composed of two parts. Part A, which takes up 10 per cent of the P1 places earmarked for Central Allocation, is for unrestricted school choices. Parents can choose up to three government or aided primary schools in any school net. Part B takes up the remaining 90 per cent of the P1 places earmarked for Central Allocation. Parents of applicant children residing in the school net concerned are to select schools from the "Choice of Schools List for Central Allocation (Primary One Admission 2026)" of their school net, while parents of applicant children who intend to commute daily to schools in Hong Kong are to select schools from the "2026 Choice of Schools List for Central Allocation (For Applicant Children who intend to commute daily to schools in Hong Kong)". Parents should fill in the Choice of Schools Form in the order of their preference.

The mechanism of the Central Allocation is based on parents' choices in general. The computer-programmed allocation will first process the school choices in Part A and then the school choices in Part B. For oversubscribed schools, the order of priority in allocating places will be determined by random numbers generated by the computer for individual applicants to ensure fairness.

For information about the procedures for Central Allocation, please call the EDB's 24-hour automatic telephone enquiry service at 2891 0088.

Release of Central Allocation results

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For parents who have already activated their ePOA account via "iAM Smart" or "iAM Smart+", they will receive their Central Allocation results through the ePOA from 10am on June 3. Parents who wish to receive the allocation results via SMS on June 3 may choose such an option in the Choice of Schools Form. In addition, the allocation results will be sent to parents by post on June 3 and 4.

Source: AI-found images