Hong Kong Securities Regulatory Commission's Quarterly Report: Hong Kong continues to deepen the advantages of Mainland China's connectivity as an international gateway to Chinese assets

The Zhitong Finance App learned that on August 26, the Hong Kong Securities Regulatory Commission published the “Quarterly Report”, showing that the Hong Kong capital market grew strongly again during the quarter due to fluctuations in the global market environment. The main highlights include breakthroughs in offshore products, continued capital inflows from Hong Kong Stock Connect, and continued strong initial public offering activities.

In the quarter ending June, Hong Kong made positive progress in many areas as an external gateway to the mainland market. The Securities Regulatory Commission approved Hong Kong Exchanges and Clearing Limited to launch 5-year treasury bond futures, and the product was listed for trading in early August. As the only offshore Chinese treasury bond futures product at present, the futures have attracted the participation of various investors in the market, further strengthened Hong Kong's role as a RMB asset risk management hub, and helped promote the internationalization of the RMB.

Swap transactions have also remained active. The average daily turnover jumped 50% year over year, while the total transaction amount of RMB interest rate swap contracts has already exceeded RMB 13.3 trillion. During the quarter, Hong Kong Stock Connect recorded net capital inflows for 34 consecutive months, setting the longest continuous record in history. Since launch, the cumulative net capital inflow has exceeded RMB 5.4 trillion (HK$, same below), while the average daily turnover of Hong Kong Stock Connect accounts for 22% of Hong Kong market turnover.

The IPO market continued to be active during the quarter, and the amount raised increased 12% year over year to about 100 billion yuan. Nine A-share listed companies raised more than 50 billion yuan through their H-share initial public offerings. The amount of capital raised by specialty technology companies and biotech companies surged 420% year over year.

To further strengthen Hong Kong's role as a superconnector, the Securities Regulatory Commission and the China Securities Regulatory Commission announced a series of measures to deepen market cooperation in August. The Securities Regulatory Commission also signed a memorandum of understanding with the Malaysian Securities Commission in July to expand fund and dual listing cooperation.

“Hong Kong has a unique and critical mission in supporting the high-quality development of the mainland's financial market and a high level of openness,” said Dr. Wong Tin Yuen, Chairman of the Securities Regulatory Commission. In the future, Hong Kong will continue to deepen the links between the mainland and the global market. While building market resilience, Hong Kong will contribute more to the country's goal of building a financial power.”

Ms. Leung Fung-yee, Chief Executive of the Securities Regulatory Commission, said, “Over the past quarter, Hong Kong has shown vigorous vitality as a leading international financial center, thanks to the continued deepening of cross-border cooperation and active fund-raising activities. The Securities Regulatory Commission will continue to strengthen relevant initiatives to balance investor protection and market innovation with a balanced approach, further consolidating Hong Kong's unique position as the primary gateway to the Chinese market.”

In terms of asset management, exchange-traded funds (ETFs) and leveraged and inverse products approved by the Securities Regulatory Commission recorded strong growth. The total market value as of the end of June increased 43% year-on-year to 756.3 billion yuan. Subsequently, the Securities Regulatory Commission optimized the regulatory framework for leveraged and inverse products in July to allow product providers to enjoy greater flexibility, while also encouraging investors to further understand the characteristics of such single-day trading products.

Other highlights include:

a) The total assets under management for 15 tokenized retail products were 10.3 billion yuan, an increase of 280% over the previous year. The total market value of the 11 virtual asset spot ETFs has increased 55% to US$451 million since launch.

b) The Securities Regulatory Commission received 2,456 license applications during the quarter, an increase of 9% over the previous year. By the end of June, the total number of licensed institutions and persons increased by about 5% year-on-year respectively.

c) In April, for the first time, the Securities Regulatory Commission successfully prompted auditors to pay compensation for false and misleading financial statements and reached an agreement with the auditors of companies that had gone out of business. The auditor will set aside 1 billion yuan to pay compensation to independent minority shareholders.

d) The Securities Regulatory Commission completed a thematic review during the quarter and issued a circular to provide guidance on additional account opening measures with respect to certain brokers' practices for opening accounts with mainland investors.

e) Since its launch in April, the official account of the Securities Regulatory Commission's Xiaohongshu has received enthusiastic responses. The number of followers has continued to rise to more than 22,000, helping to raise public awareness of fraud prevention.