Photographer: Justin Chin/Bloomberg

Hong Kong's China Stock Link Sees 70% Surge in New Accounts

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Hong Kong’s equity trading link with mainland China has seen a surge in new accounts this year.

The number of special segregated accounts in the city, used by institutions for the stock connects with exchanges in Shenzhen and Shanghai, rose 70 percent in the first three quarters to more than 2,000, according to data from Hong Kong Exchanges & Clearing Ltd.

The increase came after the start of the second trading link, with Shenzhen in December, which added more than 800 mainland-listed companies available to trade from Hong Kong. In June, MSCI Inc. said it would include China’s stocks in its benchmark indexes next year, a move that could spur about $17 billion of inflows, according to the index compiler.

Neil McLean, Asia ex-Japan head of execution trading at Instinet Pacific, wholly-owned by Nomura Holdings Inc., said his firm was running roadshows with HKEX in Europe this week about stock connect. There’s increasing interest in the links from investors outside Asia, he said.

While daily northbound turnover through the connect rose more than 40 percent in the first half of the year, the link’s full potential may be hamstrung by issues such as a holiday trading schedule that closes the system for around 30 days each year. HKEX has said it is working to address the matter.

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