The Hong Kong Shanghai Connect and its Impact on Indexing Updated: 12/2/2014
Recently Rob Hughes, Vice President/Head of Index and Advisor Solutions, traveled to Hong Kong to focus on several Asia-Pacific initiatives, including the Hong Kong-Shanghai Connect program.
Launched on November 17th, the Hong Kong-Shanghai Connect initiative allows mainland investors to buy Hong Kong-listed equities directly and waives the need for investment licenses. The program is expected to strengthen the two cities’ roles as global financial centers and open the door for foreigners to a $4.2 trillion pool of capital.
During an interview with Bloomberg TV’s Rishaad Salamat, Hughes discussed the implications of the Shanghai-Hong Kong Stock Connect for U.S. investors and the Indexing business. “As soon as the stock connect program hit the wires, ETF sponsors in the U.S. and Europe were calling and asking what we are going to do in Hong Kong, and how can they approach the market,” he commented. Hughes also sees a tremendous amount of growth potential for ETFs in Hong Kong, and for China retail investors, accessing global ETFs in Hong Kong is a new opportunity. View the Bloomberg Interview.
Hughes also met with Fund Selector Asia, providing additional commentary. “A new access point to the A-share market creates tremendous interest in the developed world. Retail and institutional investors are interested, brokerages may want to open here, ETF managers can maybe run an ETF here. Don’t underestimate how much interest there is in access to Chinese markets." Hughes commented that the local ETF market has room to grow, as retail investors account for just 20 percent of the market, as compared to more than 50 percent in the United States.
Nasdaq Global Indexes will continue to closely monitor this initiative, as well as other opportunities in the Asia-Pac market as we firmly believe this is market poised for growth. To view a list of our current index-related ETFs listed in Asia, click here. For more information on the Connect program, view the Nasdaq corporate blog, Everything You Need to Know: Shanghai-Hong Kong Stock Connect.