Date
11 December 2017
As little as 3.87 billion yuan of Hong Kong trading quota has been used since Stock Connect began last week, with mainland investors deterred by the high threshold. Photo: Bloomberg
As little as 3.87 billion yuan of Hong Kong trading quota has been used since Stock Connect began last week, with mainland investors deterred by the high threshold. Photo: Bloomberg

High threshold deters mainland side in Stock Connect

Mainland investors find the trading account threshold in the Stock Connect scheme too high, slowing capital flow into Hong Kong, Sing Tao Daily reported Monday, citing Hong Kong stock exchange chief Charles Li.

Only 3.87 billion yuan (US$631.85 million) of the southbound quota has been used in the week since cross-border stock trading began on Nov. 17.

The scheme allows investors in Hong Kong and Shanghai to invest in each other’s stock market, subject to quotas and investment thresholds.

Mainland investors can trade stocks in Hong Kong up to a daily limit of 10.5 billion yuan and 250 billion yuan in total. On the Shanghai side, Hong Kong investors can trade up to a daily limit of 13 billion yuan and 300 billion yuan overall.

However, mainland individual investors are required to have at least 500,000 yuan in a Hong Kong trading account.

The high threshold is the reason for the thin trading in Hong Hong stocks, Li was quoted as saying.

He is urging regulators to reduce the minimum trading account for mainland investors but did not say by how much.

Mainland investors say the high threshold is unnecessary because those in the mainland who have enough money trade on other platforms.  

Another deterrent is their lack of understanding of the Hong Kong market and few arbitrage opportunities between Hong Kong H shares and Shanghai A shares, the report said.

Li said the trading volume is below expectations but added the program is a long-term arrangement and could take years to take hold.

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