Strengthening Financial Cooperation Between Hong Kong And Hong Kong To Push Hong Kong Stocks ETF

According to Hong Kong media, according to the CEPA supplementary agreement seven, the mainland and Hongkong will strengthen cooperation in financial services and product development, and launch Hong Kong stock ETF (Exchange Traded Fund) in the mainland at an appropriate time.

According to government sources, the mainland's Hong Kong stock ETF involves two cross-border securities markets, which are far-reaching. They will only be released when conditions are ripe and available in the market, and there is no actual timetable.

As for the listing of ETF on the Shenzhen or Shanghai stock exchanges, it is a commercial decision and there is no relevant set restriction.

Although the supplementary agreement does not mention when the mainland will launch the ETF of the Hong Kong stock market, Zhang Yujun, President of the Shanghai stock exchange, said earlier that it hoped to launch H-share ETF this year.

He said that some mainland issuers are now preparing to approve the ETF of the Hong Kong stock exchange to the regulatory authorities. The Shanghai Stock Exchange regards H-share ETF as the focus of its work this year, and hopes that it will be successfully launched this year.

For reports that the mainland has already set up the investment cap for Hong Kong stock ETF, Zhang Yujun said that the amount of ETF depends largely on the degree of market acceptance.

He also said that the Hong Kong stock ETF is the most feasible and popular market among many cross-border listed products, so that financial cooperation between the two places can be gradual.

The timing of trade between two places leads to arbitrage.

Although the Shenzhen stock exchange is preparing ETF, Zhang Yujun did not respond to the fact that Shanghai would be launched earlier than Shenzhen.

He said that the exchange only played a role of coordination and communication in the process of cross-border ETF development, and when the ETF of Hong Kong stock was actually launched, more depends on the progress of fund companies and customers' preparations.

However, the introduction of Hong Kong stock ETF in the mainland will also have some impact on Hong Kong. Li Xiaojia, chief executive of HKEx, has said that there are market participants who worry that if the mainland launched the ETF, the future ETF paction may flow from Hong Kong to Shanghai and Shenzhen. However, he believes that in the long run, more investors will buy and sell Hong Kong shares ETF, which will make them more aware of the attributes of the Hong Kong stock market and products and help promote the local market.

Some market participants worry that Shanghai and Hongkong stock markets are different in opening and closing time, stock trading and vacation arrangements.

For example, Shanghai opened at 9:30 in the morning, closed at 3 hours, closed at 4 hours at 10 hours, and the time of delivery was "T%2B1" in Shanghai, and it was "T%2B2" in Hong Kong.

The gap between Shanghai and Hongkong in these areas may lead to a number of implementation and risk management. For example, speculators can make use of the paction and the TDOA arbitrage in both places. Therefore, it is necessary to solve the related problems before launching the Hong Kong stock ETF.

As regards futures, the agreement supports the establishment of qualified subsidiary Futures Company to set up subsidiaries in Hong Kong. Up to the end of March this year, six mainland Futures Company have established subsidiaries in Hong Kong. However, the agreement has not mentioned in detail what options are available to encourage these companies to come to Hong Kong to develop.