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Initial Hong Kong Exchanges and Clearing analysis indicates active and relatively balanced buy-and-sell orders in each direction. Photo: AFP

Hong Kong-Shanghai Stock Connect turnover higher than daily quota, says HKEx

Data from the first four weeks of trading under the Stock Connect scheme reveals that average daily turnover is higher than the daily quota, indicating active and relatively balanced buy-and-sell orders in each direction.

Data from the first four weeks of trading under the Stock Connect scheme reveals that average daily turnover is higher than the daily quota, indicating active and relatively balanced buy-and-sell orders in each direction, according to the Hong Kong Exchanges and Clearing.

In its first analysis since the scheme began on November 17, HKEx said average daily turnover for northbound trading, where Hong Kong and international investors buy A-shares listed in Shanghai via the HKEx, during the first 20 trading days was 5.84 billion yuan (HK$7.39 billion).

The amount is 1.8 times the average northbound quota usage of 3.29 billion yuan, which is 25.3 per cent of the 13 billion daily quota.

Southbound trading, where mainlanders buy Hong Kong listed stocks via the Shanghai Stock Exchange, was much lower with only an average of 757 million yuan traded during the same period, equal to 1.59 times the daily quota usage of 477 million yuan, which is 4.5 per cent of the 10.5 billion yuan daily quota.

The stock quota is calculated on a net basis, where sell orders are offset against buy orders.

The highest number of contracts came on December 9 when northbound trading turnover stood at 10.24 billion yuan, nearly nine times the quota usage of 1.16 billion yuan, offset by nearly equal buy and sell trading.

After the first four weeks of trading, 21.5 per cent of the total 300 billion yuan quota has been used for northbound trading, while only 3.32 per cent of the 250 billion of total southbound quota has been used.

Brokers said the initial low turnover was within expectations as the scheme launched before many overseas fund houses had received approval from their own local regulators. They expect trading will gradually increase when more overseas funds receive approval.

Funds domiciled in Luxembourg and other European countries are not allowed to invest in A shares without approval. So far, only one fund in Luxembourg has been given the nod.

"Stock Connect has been running smoothly with complete operational stability, giving both international and Chinese investors convenient and sustainable access," said Charles Li Xiaojia, chief executive of HKEx.

This article appeared in the South China Morning Post print edition as: Stock Connect turnover higher than daily quota
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