In 2023, investments from China into Hong Kong's stock market reached a historic high, highlighting the interconnection between the markets.
Record Investments in the Stock Market
This year, China invested over HK$820 billion ($104 billion) into Hong Kong's stock market via the Stock Connect program, surpassing last year's total of HK$807.9 billion. This sets the stage for the strongest year for capital inflows from mainland China since the program's inception.
Impact of Stock Connect on Trading
The Stock Connect program, launched in 2014, links the Shanghai and Shenzhen exchanges with Hong Kong, allowing mainland investors to move funds across the border while adhering to currency control laws. By 2025, it is set to become the main channel for Chinese investors to access off-limits assets. Currently, southbound activity constitutes more than half of all trades on Hong Kong's main board, a significant increase from less than 20% in 2019.
Government Support for Hong Kong
This influx of capital is being strongly supported by policymakers. People's Bank of China Governor Pan Gongsheng remarked at a Hong Kong conference that the country would back more high-quality enterprises to list and issue bonds in Hong Kong. Following this initiative, Hong Kong's IPO pipeline reached a record high, indicating renewed interest from mainland companies in secondary listings in the region.
The Hong Kong stock market is showing significant recovery driven by internal investments from China, with government support further encouraging the growth of the financial hub.
