Beijing Allows Mainland Insurers to Invest in Hong Kong ETFs via Stock Connect
HK01 · 2 SOURCESabout 3 hours ago2 MIN
Summary
China's National Financial Regulatory Administration (NFRC) announced on September 18, 2024, that it will actively support mainland insurance funds to participate in the mainland-Hong Kong financial market interconnection, permitting mainland insurance institutions to invest in Hong Kong Stock Exchange-listed ETFs through the Shanghai-Shenzhen-Hong Kong Stock Connect . Hong Kong officials expressed strong support for the measure, describing it as an important step toward deeper integration of the two markets.
Key Points
- NFRC Deputy Director Xiao Yuanqi met with Hong Kong officials including Treasury Secretary Xu Zhengyu, SFC Investment Products Executive Director Wu Jiali, and HKEX CEO Chen Yiting on September 18 to discuss further capital market cooperation under the 15th Five-Year Plan
- The new measure allows mainland insurance institutions to use Stock Connect channels to invest in ETFs listed and traded on the Hong Kong Stock Exchange
- SFC CEO Leung Fung-yee stated the policy will enrich options for mainland insurers' overseas asset allocation through Hong Kong, consolidating its status as a leading asset and wealth management hub
- From January to July 2024, southbound ETF trading via Stock Connect averaged HK$5.8 billion daily, a 61% year-on-year increase; northbound trading averaged RMB 5.1 billion daily, up 86% year-on-year
- Hong Kong's overall ETF market trading volume reached HK$40.6 billion daily during the same period, representing a 22% year-on-year surge
- HKEX CEO Chen Yiting emphasized the new measure will significantly enhance Hong Kong ETF market liquidity and reinforce the city's position as an international financial center
Why It Matters
The policy marks a substantial expansion of the Stock Connect framework, which has operated since ETF products were included in 2022, providing mainland insurance companies—typically among the largest institutional investors—with direct access to Hong Kong's diverse range of ETF products including index funds, active funds, and thematic offerings. This inflow of insurance capital is expected to deepen Hong Kong's ETF market development while offering mainland insurers enhanced risk management tools and portfolio diversification opportunities through the city's international capital market .
The policy marks a substantial expansion of the Stock Connect framework, which has operated since ETF products were included in 2022, providing mainland insurance companies—typically among the largest institutional investors—with direct access to Hong Kong's diverse range of ETF products including index funds, active funds, and thematic offerings. This inflow of insurance capital is expected to deepen Hong Kong's ETF market development while offering mainland insurers enhanced risk management tools and portfolio diversification opportunities through the city's international capital market .