Hong Kong's capital markets have continued to reap benefits since the third quarter from the success of Connect schemes with the Mainland and breakthroughs in Middle East market connectivity, according to the Securities and Futures Commission's (SFC) Quarterly Report published today.

Marking the tenth anniversary of the scheme, the Mainland-Hong Kong Stock Connect had notched up strong net southbound inflows up to end-November, amounting to RMB664.3 billion year-to-date and RMB3.2 trillion cumulatively. Driving the growth of the city's exchange-traded fund (ETF) market, the enhanced ETF Connect boosted the number of eligible Hong Kong ETFs to 16 with a total market capitalisation of more than $300 billion (Note 1).

Cross-boundary Wealth Management Connect scheme recorded a more than 60% increase in southbound investment since its February enhancement. Under the Mainland-Hong Kong Mutual Recognition of Funds scheme, net subscriptions for Hong Kong funds amounted to RMB8.8 billion for the quarter. Swap Connect – the first derivative market connect – saw active investor participation, with daily transactions of renminbi interest rate swaps averaging RMB10 billion.

Connectivity with the broader Asian markets also made strides with the landmark cross-listing of two Hong Kong ETFs on the Saudi exchange. Being the largest in the Saudi ETF market with a combined market capitalisation exceeding US$1.6 billion upon listing, the two feeder ETFs have been trading actively since their listing in late October.

“Our ETF market has achieved new milestones this year with continued robust growth in eligible ETFs under the Connect scheme and with new connectivity to the Middle East,” said Ms Julia Leung, the SFC's Chief Executive Officer.

“Going forward, with broadening mutual market access with the Mainland, the SFC will strive to elevate Hong Kong to a global hub for multi-asset investing and offshore renminbi fixed-income business,” she added.

Other highlights in the quarterly report included:

a)     Hong Kong’s ETF market continued to grow, with the market capitalisation of ETFs up 34% year-on-year (YoY) (Note 2). They recorded net inflows of $6.3 billion in the quarter. Hong Kong-domiciled funds saw assets under management up 29.5% YoY to $1.67 trillion, with continued net fund inflows of about $34 billion in the quarter. The number of licensed asset managers jumped 24% YoY, while the number of open-ended fund companies also surged 132.6% YoY.

b)     The numbers of both corporate and individual licence applications received by the SFC increased in the quarter, up 56% and 23% YoY, respectively.

c)     The SFC is reviewing 15 licence applications from virtual asset (VA) trading platforms (11 deemed to be licensed), and is on track to license a few deemed operators this year under a swift licensing process. The market capitalisation of Asia’s first batch of VA spot ETFs listed in Hong Kong was up more than 70% with average daily turnover doubling from their launch in April to late November.

d)     A number of leading Mainland enterprises went public through IPOs in Hong Kong after the Mainland announced support measures in April. With the SFC’s approval, the Stock Exchange of Hong Kong streamlined the new listing vetting procedure. All market operations under severe weather trading were smooth on 14 November.

e)     The Court of First Instance handed down the heaviest jail sentence on market manipulation cases since the Securities and Futures Ordinance took effect. Besides, the District Court has set the next hearing date for three large ramp-and-dump cases involving suspected securities-related fraud and money laundering following joint investigations by the SFC and the Police.

The quarterly report is available on the SFC website.

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笔记：

1.Unless otherwise specified, figures are as of end-September 2024.

2.The number of ETFs includes leveraged and inverse products.