Date
23 May 2017
Lawmaker Christopher Cheung said the daily limit for southbound investment in the stock connect had been used up for two days in a row. Photo: HKEJ
Lawmaker Christopher Cheung said the daily limit for southbound investment in the stock connect had been used up for two days in a row. Photo: HKEJ

Stock connect quota expected to be doubled soon

Hong Kong brokerages are calling on Chinese authorities to loosen the daily limit on southbound investment in the stock connect program and scrap the 500,000 yuan (US$80,548) asset threshold for mainland investors, the Hong Kong Economic Journal reported Friday.

Christopher Cheung Wah-fung, a lawmaker representing the financial services sector, said the daily quota under the Shanghai-Hong Kong Stock Connect scheme, which is currently pegged at 10.5 billion yuan, is expected to be doubled after the review.

The lawmaker led a delegation who met with Shenzhen officials recently to discuss plans to connect the mainland city to Hong Kong’s capital market.

The long-awaited Shenzhen-Hong Kong Stock Connect will prompt the central government to grant a higher aggregate quota for the two stock links, said Yan Feng, chairman of the Chinese Securities Association of Hong Kong.

The daily limit for southbound investment in the Shanghai stock connect has been used up for two consecutive days.

About 23 percent of the aggregate quota of 250 billion yuan for southbound investors and 38.56 percent of the 300 billion yuan limit for the northbound link had been utilized since the program began.

The move to allow mainland mutual funds to participate in the stock link has driven the daily turnover in the Hong Kong stock market to over HK$250 billion.

Brokerages, along with the Hong Kong Exchanges and Clearing Ltd. (00388.HK), are expanding their server capacities to accommodate the enormous size of daily transactions, Cheung said.

Translation by Vey Wong

[Chinese version 中文版]

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