Detailed explanation of the six focuses of Shenzhen-Hong Kong Stock Connect： How will it affect A shares in four months？

　　BEIJING, Beijing, August 17 (Xinhua) On the 16th, the preparatory work for the implementation of Shenzhen-Hong Kong Stock Connect was officially launched. After the State Council approved the Shenzhen-Hong Kong Stock Connect Implementation Plan, in the evening, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission jointly signed the Shenzhen-Hong Kong Stock Connect Joint Announcement, approving in principle the establishment of an interconnection mechanism for Shenzhen-Hong Kong stock market transactions. What does the approval of Shenzhen-Hong Kong Stock Connect mean to China’s capital market? What is the impact on A shares or H shares? When will it be officially launched? What is the investment quota? What are the investment targets? How high is the investment threshold? The reporters from Zhongxin. com will sort out and interpret them for you one by one.

　　What is the significance?

　　Investors can better share the fruits of economic development between the two places.

　　Zhang Xiaojun, spokesman of the Securities and Futures Commission, said that the launch of Shenzhen-Hong Kong Stock Connect is another major measure to connect the financial markets of the Mainland and Hong Kong, which has many positive meanings.

　　First, it is conducive to investors to better share the economic development achievements of the two places. It will further expand the scope and quota of investment targets for the interconnection of the mainland and Hong Kong stock markets to meet the diversified cross-border investment and risk management needs of investors.

　　Second, it is conducive to promoting the opening and reform of the mainland capital market and further learning from Hong Kong’s more mature development experience. It can attract more overseas long-term funds to enter the A-share market, improve the investor structure in the A-share market and promote economic transformation and upgrading.

　　Third, it is conducive to deepening financial cooperation between the mainland and Hong Kong. It will further give play to the geographical advantages of Shenzhen and Hong Kong and promote the orderly economic and financial development of the Mainland and Hong Kong.

　　Fourth, it is conducive to consolidating and upgrading Hong Kong’s position as an international financial center and promoting the internationalization of the RMB.

　　What is the impact on A shares and H shares?

　　Opening for half a year is expected to bring 75-150 billion incremental funds to A shares.

　　Ping An Securities believes that after the implementation of Shenzhen-Hong Kong Stock Connect, in the long run, whether the capital will show a "southbound" or "northbound" net inflow depends on the comparative relationship between Shenzhen and Hong Kong.

　　Qiu Xiaohua, chief economist of Minsheng Securities, told the reporter of Zhongxin.com (WeChat WeChat official account: cns2012) that the approval of the launch of Shenzhen-Hong Kong Stock Connect will help the interconnection of the two markets, and the impact on the A-share market will be more positive than negative.

　　Guotai Junan believes that after the implementation of Shenzhen-Hong Kong Stock Connect, if the average daily quota utilization rate of Shenzhen Stock Connect reaches 5%-10% in the next six months,It is estimated that it will bring about 75-150 billion incremental funds to the A-share market, accounting for 0.9%-1.8% of the current market value of Shenzhen Component Index of 8.5 trillion.The impact on the short-term liquidity of the market is limited. Although Shenzhen Stock Connect is difficult to change the original trend of the market, the policy landing is good for short-term risk appetite.

　　On the 16th, the Shanghai and Shenzhen stock markets diverged, and the Shanghai Composite Index closed at 3,110.04 points, down 0.49%. The Shenzhen Component Index reported 10,883 points, up 0.56%; Growth enterprise market index reported 2201.10 points, up 0.36%. In the previous two trading days, A shares continued to rise, and the Shanghai Composite Index broke through the 3100 mark; The Shenzhen Component Index rose by 1.32% and 2.79% on the 12th and 15th respectively.

　　In addition, Yu Hao, manager of Guangfa Shanghai-Hong Kong Shenzhen New Opportunity Fund, believes that after the mechanism of Hong Kong Stock Connect has been improved through Shenzhen-Hong Kong Stock Connect and quota liberalization, Hong Kong stocks will be fully opened to domestic investors, and many outstanding Hong Kong stocks will receive sustained attention from mainland investors and be revalued for a long time.

　　In the past 10 trading days, the Hang Seng Index has experienced a strong rise, breaking through the 22,000 points and 23,000 points. On the 16th, the Hang Seng Index fell slightly by 0.09% to close at 22,910.84 points.

　　When will it start?

　　It takes about 4 months to prepare.

　　According to the CSRC, it will take about four months to prepare from the date of publication of the Joint Announcement to the formal implementation of the above plan, and the formal implementation time will be announced separately.

　　According to the Joint Announcement, the exchanges and registration and settlement institutions of the two places will formulate, publish or adjust and improve relevant business rules, actively promote the development and testing of technical systems, business qualification applications, investor education and other preparatory work, and will announce the progress. Shenzhen-Hong Kong Stock Connect can be officially launched only after the relevant transaction settlement rules and systems are prepared, all relevant regulatory approvals are obtained, market participants have fully adjusted their business and technical systems, and all necessary cross-border regulatory enforcement cooperation arrangements and investor education are ready.

　　What are the investment target stocks?

　　The stock market value of Shenzhen Stock Connect Standard needs to exceed 6 billion yuan to expand the Hong Kong Stock Connect Standard.

　　The stock range of Shenzhen Stock Connect is the constituent stocks of Shenzhen Component Index and Shenzhen Small and Medium Innovation Index with a market value of 6 billion yuan or more, and the stocks of A+H shares listed on Shenzhen Stock Exchange. At the beginning of the opening of Shenzhen Stock Connect, the investors who bought and sold the GEM stocks of Shenzhen Stock Exchange through Shenzhen Stock Connect were limited to institutional professional investors defined by relevant Hong Kong rules. After the relevant regulatory issues were resolved, other investors could buy and sell the GEM stocks of Shenzhen Stock Exchange through Shenzhen Stock Connect.

　　The stock range of Hong Kong Stock Connect under Shenzhen-Hong Kong Stock Connect is the constituent stocks of Hang Seng Composite Large-cap Index, Hang Seng Composite Medium-cap Index, Hang Seng Composite Small-cap Index with a market value of HK$ 5 billion or more, and A+H shares listed on the Hong Kong Stock Exchange.

　　Compared with the Hong Kong Stock Connect under the Shanghai-Hong Kong Stock Connect, the stock range of the Shenzhen-Hong Kong Stock Connect is based on the existing Hong Kong Stock Connect under the Shanghai-Hong Kong Stock Connect, and the constituent stocks of the Hang Seng Composite Small-Cap Index (including stocks with a market value of HK$ 5 billion and above) and the stocks of A+H shares listed on the Hong Kong Stock Exchange and Shenzhen Stock Exchange at the same time.

　　What is the investment quota?

　　There is no longer a total amount limit, and the daily quota of Shenzhen Stock Connect is 13 billion

　　The cancellation of the total amount of Shanghai-Hong Kong Stock Connect will take effect immediately from the date of the Joint Announcement. Shenzhen-Hong Kong Stock Connect no longer has a total amount limit.

　　The daily quota of Shenzhen-Hong Kong Stock Connect is consistent with the current standard of Shanghai-Hong Kong Stock Connect, that is, the daily quota of Shenzhen Stock Connect is 13 billion yuan, and the daily quota of Hong Kong Stock Connect under Shenzhen-Hong Kong Stock Connect is 10.5 billion yuan.

　　Zhang Xiaojun said that cross-border investment is subject to daily quota management and real-time monitoring. The regulatory agencies of the two places can adjust the investment quota according to market conditions. The daily quota of Hong Kong Stock Connect under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect is controlled by Shanghai and Shenzhen Stock Exchanges respectively, that is, both are RMB 10.5 billion, which does not affect or adjust each other.

　　How high is the investment threshold?

　　The balance of individual investor account of Hong Kong Stock Connect is not less than 500,000 yuan.

　　According to the Joint Announcement, Shenzhen-Hong Kong Stock Connect refers to the relevant provisions of the Joint Announcement of Shanghai-Hong Kong Stock Connect on April 10, 2014, such as trading, settlement and listing regulations, settlement methods, investor suitability, cross-border supervision and law enforcement cooperation between the two places, and counterpart liaison mechanism.

　　Zhang Xiaojun said that investors in Hong Kong Stock Connect are limited to institutional investors and individual investors with a total balance of not less than 500,000 yuan in securities accounts and capital accounts.

　　According to the data released by China Securities Depository and Clearing Co., Ltd., by the end of July, the total number of individual investors holding A-shares with a market value of over 500,000 was 2,931,218, which reached the threshold for investing in Hong Kong Stock Connect. (Cheng Chunyu)