Shanghai And Hong Kong ETF Interworking Products Listed For The First Time

The two-way opening of the capital markets of Shanghai and Hong Kong has gone further.

On June 1, the opening ceremony of Shanghai Hong Kong ETF interchange was held simultaneously at the Shanghai Hong Kong stock exchange. One ETF product was listed and traded in both places. Huatai Bairui Southern Dongying Hengsheng technology ETF (513130. SH) is the first Shanghai Hong Kong interworking product of Shanghai Stock Exchange, and the corresponding interworking product, China Securities photovoltaic industry ETF (3134. HK) of South East China bright bright light industry was listed on the Hong Kong stock exchange, marking the formal launch of the market interconnection mechanism between Hong Kong and Shanghai ETF.

Cai Jianchun, deputy secretary of the Party committee and general manager of the Shanghai Stock Exchange, said, "the Shanghai Hong Kong ETF interworking is another achievement of deepening the exploration of high-efficiency interconnection cooperation mode based on the successful experience of early stage innovative product cooperation, and also enriches new selection targets for the growing demand for cross-border investment."

Data shows that since 2018, the ETF market of Shanghai Stock Exchange has been developing rapidly. At present, the market value of ETF has reached trillion yuan, ranking sixth in the world and second in Asia; Trading volume ranked fourth in the world and the first in Asia.

The two-way opening of the capital markets of Shanghai and Hong Kong has gone further- Visual China

Shanghai Hong Kong interworking products listed for the first time

In November 2014, Shanghai Stock Exchange took the lead in launching the Shanghai Hong Kong stock connect, realizing the deep integration of the mainland and the global capital market. Over the past six years, the Shanghai Hong Kong stock connect has been running smoothly and orderly, and the transaction amount has continued to rise, and on this basis, it has given birth to the ETF interworking mechanism. Under this mechanism, Shanghai and Hong Kong ETF interworking products can be listed cross-border to meet the growing cross-border investment demand of investors in both places.

The exchange of two products of Hang Seng technology ETF and photovoltaic ETF co operated by Huatai Perry fund and southern Dongying asset management has built a convenient bridge for mainland investors to invest in the technology industry of Hong Kong market and Hong Kong investors to invest in the photovoltaic industry in the mainland.

Among them, Huatai Bairui fund is the second largest ETF management company in the mainland, with a management scale of nearly 100 billion yuan. South East UK asset management is an ETF expert in the Hong Kong market, with a management scale of over US $10 billion.

It is understood that Huatai Bairui South Dongying Hengsheng technology ETF raised 1.172 billion yuan, with more than 40000 investors. Investors of the fund do not need to open a Hong Kong stock account and support trading within t + 0. Its main investment target is the largest ETF of the Hong Kong Stock Exchange in the world (as of May 24, 2021) - South East Hang Seng technology ETF (3033. HK), which is conducive to the fund manager's control of tracking error.

Liu Jun, director of Investment Department of Huatai Bairui index and fund manager, said in an interview with 21st century economic report that "unlike the main investment target of Shanghai Hong Kong stock connect, Shanghai Hong Kong ETF interworking products bring asset management products into the investment scope. In the era of asset management, many investors have shifted from investing in stocks to buying asset management products, and upgrading from basic asset allocation to asset management products, It meets the cross-border investment needs of investors. "

From the perspective of transaction efficiency and cost, Liu Jun introduced that the Shanghai Hong Kong ETF interworking product adopts T + 0, which has higher transaction efficiency. Moreover, the ETF is exempt from stamp duty in Hong Kong. Compared with investors who directly go to Hong Kong to purchase Hong Kong shares through the Hong Kong stock connect, the transaction cost of stamp duty is saved.

However, Liu Jun pointed out to investors that although Shanghai Hong Kong ETF interworking products have lowered the trading threshold for investors, it is after all a global asset allocation, and exchange rate fluctuation is one of the main factors to be considered.

Promoting the two-way opening of capital markets in the two places

In recent years, the Shanghai Stock Exchange has continuously accelerated the pace of internationalization, studied and launched more channels and ways for foreign capital to participate in the domestic market, and actively contributed to the construction of Shanghai international financial center. Since the first cross-border ETF was listed on the Shanghai Stock Exchange in 2013, the scope of cross-border ETF in Shanghai Stock Exchange has covered the United States, Germany, France, Japan and Hong Kong, China. In 2019, the Shanghai Stock Exchange promoted the launch of the first batch of China Japan ETF interworking products, expanded the practical cooperation between China and Japan in the capital market, and launched innovative cross-border ETF cooperation business model. China's capital market is increasingly integrated into the international market.

Continuously deepening the interconnection mechanism of domestic and foreign markets is an important part of promoting the formation of a new pattern of high-level two-way opening up. Since the Shanghai Hong Kong stock connect was officially opened in 2014, this innovative mechanism has accelerated the linkage between the stock markets of Shanghai and Hong Kong, deepened exchanges and cooperation, and effectively expanded the investment channels of investors in both places. Based on the above-mentioned foundation, the Shanghai Hong Kong ETF interworking is another achievement of deepening the exploration of efficient interconnection cooperation mode in the field of Exchange listed funds.

"Hong Kong stock exchange is one of the most diversified product markets in Asia. Among them, the number of China's new economy themed products is increasing, and the average daily turnover in the first quarter of this year has increased by more than 30% compared with that of last year. Through the Hong Kong mainland ETF linkage scheme, international investors can get involved in a range of investment themes in the mainland market, and provide a channel for international ETF issuers to reach investors in mainland China. "

Liu Jun expects that more Shanghai Hong Kong ETF interworking products will be listed in the future“ Many domestic industries have great competitiveness in the global market, and many products are also what domestic investors want to configure. Through the exchange of products, it provides a platform for asset managers of the two places to introduce each other's scarce targets in the local market, so as to realize one-stop global asset allocation for investors in both places. In addition, Shanghai Hong Kong ETF interworking reduces the threshold for domestic asset managers to allocate overseas asset indexes. More asset managers can develop overseas index products through Shanghai Hong Kong ETF interworking, explore relatively scarce local targets, and meet the requirements of domestic investors. "

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