China Vice Premier Li Keqiang gave Hong Kong’s stock market a huge fillip by announcing on 17 August that China would start an exchange-traded fund linked to Hong KoPARA_BREAK_SENTINEL_9f8e7d6c

China Vice Premier Li Keqiang gave Hong Kong’s stock market a huge fillip by announcing on 17 August that China would start an exchange-traded fund linked to Hong Kong stocks. The decision to do so is to enhance Hong Kong’s reputation as a global financial hub: for a long time it has been somewhat parochial, dominating the Asia region as a financial hot spot but lacking the punch to take itself into the global arena. This could be the start of that happening. “The ETF constituted by Hong Kong-listed stocks will be launched. Its status as a financial center in Asia and globally is crucial for Hong Kong’s development,” Li was quoted on Bloomberg as saying.

Early last year the PRC government toyed with the idea of allowing Chinese nationals to invest directly in Hong Kong stocks under the so-called “through-train” program but shelved it, preferring instead to broaden the remit under which QDII-approved Chinese fund managers could invest in foreign markets. Hong Kong-based Chinese fund managers are also pleased with the news that CNY20billion (USD3.1billion) has been pledged by Li to invest in mainland China securities: an endorsement of the so-called ‘Mini QFII’ scheme and a clear sign, going forward, that offshore RMB will start to be allowed to get re-invested back into China. Commenting on the Hong Kong ETF, Haitong International Asset Management portfolio manager Danny Yan said that the impact would be more long term than short term but would “benefit Hong Kong in terms of depth and liquidity”.