Government News
China's ETF connect sees largest expansion ever 2026-01-20
The Stock Connect program that allows investors in Hong Kong and the Chinese mainland to trade stocks in each other's markets has marked its biggest expansion since starting in 2022.
Fifty-four ETFs were added under the northbound Shanghai-Hong Kong Stock Connect and 44 under the northbound Shenzhen-Hong Kong Stock Connect on January 19, bringing the total number of such products to 364, according to the website of the Hong Kong Exchanges and Clearing. In addition, seven products were temporarily removed.
The highly anticipated ETF tracking the CSI A500 Index was included for the first time, with popular thematic ETFs, including aerospace and satellites, high-end manufacturing, and artificial intelligence, also enriching investment options.
The expansion further enriches Chinese mainland investment tools for overseas investors and helps them more comprehensively and precisely invest in the market, a person from Huatai-PineBridge Investments, the joint venture between Chinese securities brokerage Huatai Securities and US global asset manager PineBridge Investments, told Yicai. It will also likely bring more professional investors and incremental funds to the Chinese ETF market, further enhancing the international influence and competitiveness of China's capital market, the person added.
The newly included ETFs involved 29 Chinese fund managers. Leading institutions had a significant advantage, with China Asset Management having 14 newly eligible products and E Fund Management having 10, while Fullgoal Fund Management and China Universal Asset Management each had over five.
More than 60 percent of ETFs under the Stock Connect rose on the first day of the expansion. The Huaxia Power Grid Equipment ETF led with a 7.8 percent jump.
"In recent years, the threshold for the Stock Connect to include ETFs has been lowered, which will further promote the product layout and innovation of asset managers in the two regions," said Pang Yaping, general manager of the Index Research Department of E Fund Management. "More ETFs with the characteristics of both markets are expected to be included."
The inclusion of ETFs in the Stock Connect can further enrich the investment targets of overseas institutional investors, promote the improvement of the degree of institutional investment in the mainland market, and promote the expansion and improvement of the ETF market ecosystem, Pang noted.
In addition, trading and transactions on the Stock Connect are growing. The amount of northbound funds flowing into the Chinese mainland capital market via the program surged 76 percent to CNY816.6 billion (USD117.3 billion) last year from the previous year and over six times from 2023, according to statistics from Wind Information.
The rising popularity of the Stock Connect is the result of multiple factors, including policy support, mechanism optimization, enhanced market liquidity, diversified investor demands, product innovation, and improved market sentiment, said Harvest Fund Management. "Its core value lies in short-term capital flow and active trading and promoting the deep integration of market rules, valuation systems, and investor structures between the two regions."
Source: Yicai Global
