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Markets and Securities Services |
Asia
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open-ended funds is “effectively utilised” within
one year after being granted by SAFE.
For most other RQFIIs, not only must the
investment principal be remitted to the PRC within
six months from the date the relevant quota
is granted, but there is also a lock-in period of
three months, starting from the date on which
an aggregate amount of no less than RMB100
million has been remitted to China within the
RQFII’s quota. Following the expiry of the lock-in
period, both the principal invested and any other
funds may be repatriated. However, RQFIIs should
be aware of the consequences of repatriating
principal. The RQFII quota is reduced according to
how much of the principal is repatriated and, once
taken back offshore, cannot be reinvested onshore
in excess of the reduced quota. The 2016 changes
removed the restriction on daily liquidity, and
there is now no requirement to repatriate funds
solely on a monthly basis.
Stock Connect
Following the successful development of
Shanghai-Hong Kong Stock Connect, the
“Shenzhen-Hong Kong Stock Connect”
programme launched in December (see the table
below for some of its key features).
The stocks traded on the Shenzhen
exchange are frequently issued by Chinese
companies operating in the burgeoning tech,
pharmaceutical and energy sectors. We expect
that SZ-HK Stock Connect will provide another
important conduit for international investors
seeking access to China’s market in these areas.
Quotas
SZ-HK Stock Connect has no aggregate quota
and, interestingly, the previous aggregate quota
under Shanghai-Hong Kong Stock Connect
is now also abolished. The two stock-connect
programmes will have the same daily quota
(RMB13 billion for Northbound trading and
RMB10.5 billion for Southbound trading).
Trade directions
SZ-HK Stock Connect enables trading in two
directions (see too table below):
• Northbound allows investors outside China
to trade eligible equities on SZSE, routed
through Hong Kong brokers and a securities-
Northbound
Southbound
Eligible shares
Any constituent stock of the SZSE Component
Index and SZSE Small/Mid Cap Innovation Index
that has a market capitalisation of RMB6 billion or
above and all Shenzhen Stock Exchange (SZSE)
— listed shares of companies that have issued both
A shares and H shares.
The constituent stocks of the Hang Seng
Composite LargeCap Index and Hang Seng
Composite MidCap Index, any constituent stock
of the Hang Seng Composite SmallCap Index
that has a market capitalisation of HKD5 billion
or above, and all Stock Exchange of Hong
Kong-listed (SEHK-listed) shares of companies
that have issued both A shares and H shares.
Investors
(Initial stage) investors eligible to trade shares
listed on the ChiNext Board of SZSE under the
Northbound Shenzhen Trading Link will be limited
to institutional professional investors.
(Initial stage) institutional investors and
individual investors who hold an aggregate
balance of not less than RMB500,000 in
securities and cash accounts.
Brokers
SEHK members who fulfil eligibility
requirements.
SZSE members who fulfil eligibility
requirements.
Currency
Traded and settled in offshore RMB.
Traded in HKD and settled in RMB.
Trading venue
SZSE.
SEHK.
Clearing house
ChinaClear.
Hong Kong Securities Clearing Co.
Key features of SZ-HK Stock Connect