Expansion of eligible stocks under Stock Connect

View PDF

Authored by: Taylor Hui and Faye Meng

Effective from 13 March 2023, the list of eligible stocks under the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect (collectively, Stock Connect) has been significantly expanded. This follows the joint announcement by Hong Kong’s Securities and Futures Commission and the China Securities Regulatory Commission on the further expansion of eligible stocks under Stock Connect back in December 2022.

In respect of northbound trading under Stock Connect, Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) released revised implementation rules on 3 March 2023, which specify the revised scope of eligible China A-Shares available to overseas and Hong Kong investors through Stock Connect. Below are some key points of the expansion:

• For the Shanghai-Hong Kong Stock Connect, the benchmark index has been expanded from SSE 180 Index and SSE 380 Index to SSE A-Share Index; the constituent stocks have been expanded from large-cap and mid-cap stocks to medium-cap and small-cap stocks listed on the SSE; and there is no longer any limitation on the number of stocks available in a single industry.

• For the Shenzhen-Hong Kong Stock Connect, the benchmark index has been expanded from SZSE Component Index and SZSE Small/Mid Cap Innovation Index to SZSE Composite Index.

• Requirements have been revised in relation to the daily average market capitalization, daily average turnover and the trading suspension ratio.

• The arrangement for initial inclusion of stocks of companies with differentiated voting rights under northbound trading has been clarified.

In respect of southbound trading, through which Mainland Chinese investors can trade stocks listed on the Stock Exchange of Hong Kong, it is worth noting that the scope of eligible stocks has been expanded to include eligible stocks of international companies primary-listed in Hong Kong.

Key Contacts

Taylor Hui

Partner | Financial Services

Email or call +852 2826 5368