It is too soon to assess Shanghai-Hong Kong Stock Connect's trading volume, as the programme has only just launched and investors need time to get familiar with the mechanism.
Acting Secretary for Financial Services & the Treasury James Lau told legislators today the Stock Connect’s investment quota is used for risk management rather than a volume target or an indicator.
Speaking on the Southbound Trading Link’s quota lagging far behind the Northbound Trading Link in the first week, Mr Lau said investors generally take a cautious approach when entering a new market, while institutional investors may need to conduct due diligence and risk assessment before joining a new market.
He said Mainland and Hong Kong stock markets have rather different structures in terms of investor profiles, regulatory requirements and trading and clearing arrangements. Some Mainland institutional investors may need to obtain regulatory approval before they participate in a new market.
The Government, regulators and the Hong Kong exchange will continue to collaborate with their Mainland counterparts to monitor Stock Connect’s development, and will communicate with market participants closely, he added.
