Hong Kong's Secretary for Financial Services and the Treasury, Christopher Hui, together with the Securities and Futures Commission's Executive Director of Investment Products, Carrie Ng, and the Hong Kong Exchanges and Clearing's Chief Executive Officer, Bonnie Chan, recently met with Vice Chairman Xiao Yuanqi of the National Financial Regulatory Administration to discuss further measures aimed at enhancing the coordinated development of capital markets between the mainland and Hong Kong.

The NFRA has simultaneously announced its active support for mainland insurance funds to participate in the financial market connectivity between the two regions, permitting these institutions to invest in Hong Kong-listed exchange-traded funds through the Shanghai-Shenzhen-Hong Kong Stock Connect. The Hong Kong SAR government has warmly welcomed this development.

Hui noted that allowing mainland insurance capital to invest in Hong Kong ETFs via Stock Connect represents a significant step in deepening financial market interconnectivity between the two places, and will inject fresh momentum into Hong Kong's asset management industry. He added that the government will actively promote the sustainable growth of the local ETF ecosystem to cater to the increasing demand from investors for diversified asset allocation.

The SFC and HKEX have also expressed their support for the initiative. The SFC's Chairman, Wong Tin-yau, expressed sincere gratitude for the NFRA's longstanding and steadfast backing of Hong Kong's capital market growth and the financial connectivity between the mainland and Hong Kong. He pointed out that the new policy broadens the diverse channels for mainland insurance funds to allocate assets overseas, highlighting the nation's resolve to deepen high-level financial opening-up and reflecting the central government's endorsement of further enhancing cross-border financial cooperation.

The SFC's Chief Executive Officer, Julia Leung, said she hopes the arrangement will further facilitate more medium and long-term capital from the mainland to use Hong Kong as a platform for international asset allocation, thereby consolidating the city's status as a leading asset and wealth management hub.

Chan stated that the new measure not only facilitates cross-border diversified asset allocation for mainland insurance institutions but will also significantly boost the liquidity of Hong Kong's ETF market, further enhancing the appeal of Stock Connect and solidifying Hong Kong's position as an international financial center.

The exchange noted that since ETFs were incorporated into Stock Connect in 2022, both southbound and northbound ETF trading have become increasingly active. In the first seven months of this year, the average daily turnover for southbound and northbound ETFs reached approximately HK$5.8 billion and RMB 5.1 billion, respectively, representing year-on-year increases of 61% and 86%. During the same period, the average daily turnover of Hong Kong's overall ETF market was HK$40.6 billion, up 22% year-on-year.