Mainland insurance funds can invest in Hong Kong ETFs through the Shanghai and Shenzhen-Hong Kong Stock Connect. Xu Zhengyu: A significant step towards deepening the interconnectedness of the financial markets between the two regions.

The Secretary for Financial Services and the Treasury of Hong Kong, Xu Zhengyu, along with Executive Director of the Investment Products Division of the Hong Kong Securities and Futures Commission, Wu Jiali, and Chief Executive of the Hong Kong Stock Exchange, Chen Yiting, visited the National Financial Regulatory Administration to meet with Vice President Xiao Yuanqi to discuss further measures to promote the coordinated development of the capital markets between the Mainland and Hong Kong. The Financial Regulatory Administration also announced its active support for Mainland insurance funds participating in the interconnected financial markets between the Mainland and Hong Kong, and supports Mainland insurance institutions in investing in HKEX exchange-traded funds (ETFs) through the Stock Connect programs between Shanghai, Shenzhen, and Hong Kong. The SAR government warmly welcomed this. Xu Zhengyu stated that allowing Mainland insurance funds to invest in Hong Kong ETFs through the Stock Connect is an important step in deepening the connectivity of the financial markets in both regions and will inject new momentum into Hong Kong's asset management industry. The government will actively promote the sustainable development of the local ETF ecosystem to meet the growing demand from investors for diversified asset allocation. The Hong Kong Securities and Futures Commission and the Hong Kong Stock Exchange also expressed their welcome for the measures. The Chairman of the Hong Kong Securities and Futures Commission, Huang Tianyou, sincerely thanked the Financial Regulatory Administration for its long-term firm support for the development of Hong Kong's capital market and the financial connectivity between the Mainland and Hong Kong, noting that the new policy broadens the channels for Mainland insurance funds to allocate overseas assets and demonstrates the country's determination to deepen high-level financial openness, as well as reflecting the central government's support for the continued deepening of financial cooperation between the two regions. The Chief Executive of the Hong Kong Securities and Futures Commission, Liang Fengyi, expressed hopes that the relevant arrangements would further facilitate more Mainland medium and long-term funds to use Hong Kong as an investment platform for international asset allocation, consolidating Hong Kong's position as a leading hub for asset and wealth management. Chen Yiting noted that the new measures not only facilitate the cross-border allocation of diversified assets for Mainland insurance institutions but will also significantly enhance the liquidity of the Hong Kong ETF market, further increasing the attractiveness of the Stock Connect and bolstering Hong Kong's status as an international financial center. The exchange mentioned that since ETFs were included in the Stock Connect in 2022, both southbound and northbound ETF trading has become increasingly active. In the first seven months of this year, the average daily trading volume of southbound ETFs and northbound ETFs under the Stock Connect was approximately HKD 5.8 billion and CNY 5.1 billion, respectively, representing year-on-year increases of 61% and 86%. The average daily trading volume of the Hong Kong ETF market in the first seven months was HKD 40.6 billion, reflecting a year-on-year increase of 22%.