There are over 3300 eligible stocks under the Shanghai Hong Kong Stock Connect, with daily trading volumes of 123.3 billion yuan and 38.3 billion Hong Kong dollars for northbound and southbound transactions, respectively. The total market value of securities assets held by mainland investors through the Hong Kong Stock Connect exceeds 3.3 trillion Hong Kong dollars, and the total amount of securities assets (including stocks and bonds) held by overseas investors in mainland China is nearly 7.6 trillion yuan... Behind each impressive number is the joint efforts of regulatory agencies and financial institutions in mainland China and Hong Kong over the past 10 years, and the continuous expansion and upgrading of the capital market interconnection mechanism. Hong Kong has released a strong gravitational pull as an international financial center. On November 17, 2014, the Shanghai Hong Kong Stock Connect was officially launched, connecting the financial infrastructure of mainland China and Hong Kong for the first time, allowing investors to entrust local securities firms to buy and sell stocks listed on each other's markets through local exchanges and settlement companies. On December 5, 2016, the Shenzhen Hong Kong Stock Connect was opened, expanding the connectivity between the mainland and Hong Kong capital markets to Shenzhen. Over the past decade, the interconnectivity represented by the Shanghai Shenzhen Hong Kong Stock Connect has achieved significant results in product coverage, trading settlement mechanisms, investor participation, and other dimensions. It has played an important role in enhancing the investability and internationalization of China's capital market, strengthening the internal balance and resilience of the mainland and Hong Kong markets, and enhancing Hong Kong's position as a hub for offshore RMB business. The landing and continuous optimization of the Shanghai Shenzhen Hong Kong Stock Connect and the Bond Connect have also significantly enhanced the international attractiveness of China's capital market, pushed A-shares and treasury bond into the global mainstream index, and attracted more foreign investors. At the same time, the inclusion of the index has also attracted more foreign investors to increase their allocation of Chinese assets. In the past decade, with the increasing involvement of domestic and foreign investors, the asset size has steadily grown. Compared to Qualified Foreign Institutional Investors (QFII) and Qualified Domestic Institutional Investors (QDII), the group of qualified investors under the Shanghai Hong Kong Stock Connect is more extensive. As of September 2024, the total market value of securities assets held by mainland investors through the Hong Kong Stock Connect exceeded HKD 3.3 trillion, which is more than 200 times that of the end of 2014. In the past 10 years, the trading volume of the Shanghai, Shenzhen and Hong Kong Stock Connect has been steadily increasing, with a growth rate of nearly 100 times. UBS's market share and trading volume in this market have also increased by about 400% compared to 10 years ago The head of UBS Global Financial Markets China, Landlord Ming, said. He stated that the Shanghai Hong Kong Stock Connect is an excellent mechanism for UBS, providing investors with a one-stop solution. Meanwhile, UBS also focuses on whether investors are long-term holders or frequent traders, and the Shanghai Hong Kong Stock Connect can also support these two types of clients to invest in the Chinese market. The Shanghai Hong Kong Stock Connect not only introduces more diversified investors to the mainland and Hong Kong markets, but also brings trillions of net inflows of funds to both markets, enhancing the inherent balance and stability of the mainland and Hong Kong markets. According to statistics from the Hong Kong Stock Exchange, since the launch of the Shanghai Hong Kong Stock Connect in 2014, northbound trading has brought a net inflow of nearly RMB 1.8 trillion to the A-share market; From historical data, in the more than 2200 trading days of the Shanghai Stock Connect and Shenzhen Stock Connect since its opening, northbound funds have bought A-shares against the trend on about 45% of the Shanghai and Shenzhen 300 Index falling trading days, playing a positive role in stabilizing expectations and hedging risks, and providing some support for the volatile A-share market. In terms of the Hong Kong Stock Connect, as of the end of September 2024, the cumulative net inflow of southbound funds was nearly HKD 3.4 trillion. Xing Cheng, the selected mixed fund manager of Hang Seng's former Hong Kong Stock Connect, said that with the increasing importance of southbound channels in the Hong Kong stock market, the liquidity and trading activity of the Hong Kong market have been further improved, which is extremely important for the stability and healthy development of the market, and at the same time enhances the risk resistance of the Hong Kong market. Peng Wensheng, Chief Economist of China International Capital Corporation (CICC) and President of CICC Research Institute, stated that from the perspective of the mainland market, the connectivity mechanism has promoted the opening up and internationalization of the mainland capital market, and assisted in the high-level financial opening-up of the mainland. From the perspective of the Hong Kong market, interconnectivity has expanded the investor base, enhanced market liquidity and depth, improved financial services and innovation capabilities, and strengthened global financial network connections. According to data from the Hong Kong Stock Exchange, since the launch of ETF trading under interconnectivity in July 2022, the number of eligible northbound ETFs has increased from 83 at the beginning to 225, accounting for over 30% of the total ETF transactions in the Shanghai and Shenzhen markets. The number of eligible southbound ETFs has increased from 4 to 16, accounting for 97% of the total ETF transactions in the Hong Kong market. Yao Jiaren, Deputy Chief Executive Officer of the Hong Kong Stock Exchange Group, stated that the products of interconnectivity have expanded from stocks, bonds, ETFs, and other categories to include swaps. In the future, the Hong Kong Stock Exchange will continue to improve and innovate its mechanisms, allowing market funds to find more investment opportunities. The continuous expansion of the scope of interconnected products has led to a steady increase in trading activity on the Shanghai Hong Kong Stock Connect. In the first three quarters of 2024, the daily average transaction volume of northbound and southbound transactions was RMB 123.3 billion and HKD 38.3 billion respectively, an increase of 21 times and 40 times compared to the first month of opening in 2014. At the same time, all cross-border capital flows under the Shanghai Shenzhen Hong Kong Stock Connect are conducted in RMB, which not only minimizes the impact on the onshore RMB market exchange rate, but also greatly enhances the investment attributes of offshore RMB and promotes the development of offshore RMB business in Hong Kong. In the past decade, China has explored a high-level path of financial opening-up with controllable risks through a two-way interconnection mechanism. Peng Wensheng believes that the new "National Nine Measures" issued by the State Council this year and the five capital market cooperation measures with Hong Kong issued by the China Securities Regulatory Commission further expand and optimize the Shanghai Shenzhen Hong Kong Stock Connect mechanism, actively explore and control risks, and ensure the smooth operation of the capital market. Looking ahead to the future, Chen Yiting, CEO of the Hong Kong Stock Exchange Group, said that connectivity is an endless task. In the future, in the process of continuous optimization and deepening of interconnectivity, all parties in the market expect to make more efforts in incorporating more types of financial products into the interconnectivity mechanism and relaxing restrictions on trading targets. (New Society)