Mainland insurance funds can be invested in Hong Kong ETFs through the Shanghai-Shenzhen-Hong Kong Stock Connect: An important step in deepening financial market connectivity between the two countries

The Zhitong Finance App learned that Hong Kong's Secretary for Financial Services and the Treasury, Mr Hui Ching-yu, together with Executive Director Wu Jiali of the Investment Products Division of the Hong Kong Securities Regulatory Commission and Hong Kong Stock Exchange Chief Executive Chen Yiting, visited the China Financial Supervisory Authority to meet with Deputy Director Xiao Yuanqi to discuss measures to further promote the collaborative development of capital markets between the Mainland and Hong Kong. The General Financial Supervisory Authority also announced that it will actively support mainland insurance funds to participate in financial market connectivity between the Mainland and Hong Kong, and support mainland insurance institutions to invest in Hong Kong Exchange-traded funds (ETFs) through the Shanghai-Shenzhen-Hong Kong Stock Connect. The Special Administrative Region Government warmly welcomed it.

Xu Zhengyu said that allowing mainland insurance funds to invest in Hong Kong ETFs through the Shanghai-Shenzhen-Hong Kong Stock Connect is an important step in deepening financial market connectivity between the two places, and will also inject new impetus into Hong Kong's asset management industry. The government will actively promote the continued development of the local ETF ecosystem to meet investors' growing demand for diversified asset allocation.

The Hong Kong Securities Regulatory Commission and the Hong Kong Stock Exchange also welcomed the measures. Chairman Wong Tin Yau of the Hong Kong Securities Regulatory Commission expressed his sincere thanks to the General Financial Supervisory Authority for its firm support for Hong Kong's capital market development and financial connectivity between the Mainland and Hong Kong over a long period of time. He pointed out that the new policy broadens multiple channels for overseas asset allocation for mainland insurance funds, highlights the country's determination to deepen high-level financial openness, and also reflects the central government's support for continuing to deepen financial cooperation between the two places. The Chief Executive of the Hong Kong Securities Regulatory Commission, Leung Fung-yee, said that it is hoped that the relevant arrangements will further facilitate the use of Hong Kong as an investment platform for more mainland medium- and long-term capital, carry out international asset allocation, and consolidate Hong Kong's position as a leading asset and wealth management hub.

Chen Yiting said that the new measures will not only facilitate the cross-border multi-asset allocation of mainland insurance institutions, but will also significantly enhance the liquidity of the Hong Kong ETF market, further enhance the appeal of the Shanghai-Shenzhen-Hong Kong Stock Connect, and consolidate Hong Kong's position as an international financial center. The exchange mentioned that since ETFs were included in the Shanghai, Shenzhen, and Hong Kong Stock Connect in 2022, both southbound and northbound ETF transactions have become increasingly active. In the first 7 months of this year, the average daily turnover of the Shanghai and Shenzhen-Hong Kong Stock Connect Southbound ETFs and Northbound ETFs was about HK$5.8 billion and RMB 5.1 billion respectively, up 61% and 86%, respectively. The average daily turnover of the Hong Kong ETF market in the first 7 months was HK$40.6 billion, up 22% year-on-year.