Chinese mainland, HK to expand eligible stocks under Stock Connect program

The top securities regulators in the Chinese mainland and Hong Kong said on Monday that they have agreed in principle to expand the range of stocks eligible under the Stock Connect program between the two capital markets.

The move seeks to further deepen mutual stock market access between the Chinese mainland and Hong Kong and promote the development of both capital markets, according to a joint statement released by the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission.

The Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, which started operating in 2014 and 2016 respectively, give mainland and international investors direct access to each other's stock markets.

For northbound trading, eligible stocks will include constituent stocks of the Shanghai Stock Exchange A Share Index and the Shenzhen Stock Exchange Composite Index that have a market capitalization of 5 billion yuan (about 716.9 million U.S. dollars) or above and meet certain liquidity criteria.

Stocks of companies listed on the two mainland exchanges that have issued both A shares and H shares will also be included.

For southbound trading, the scope of eligible stocks will be expanded to include stocks of foreign companies primary-listed in Hong Kong that are constituents of the Hang Seng Composite Indices and meet relevant criteria.

Also, the scope of southbound eligible stocks under Shanghai-Hong Kong Stock Connect will be aligned with that under Shenzhen-Hong Kong Stock Connect to include constituents of the Hang Seng Composite SmallCap Index with a market capitalization of 5 billion Hong Kong dollars or above.

Preparations for the expansion of eligible stocks will take about three months, and the stock exchanges will announce the official launch date in due course, the statement said.