The top securities regulators of the Chinese mainland and Hong Kong announced Monday that they have agreed in principle to expand the range of stocks eligible under the Stock Connect program between the two capital markets.

The move seeks to further deepen mutual stock market access between the Chinese mainland and Hong Kong and promote the development of both capital markets, according to a joint statement released Monday by the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission.

Eligible stocks under Stock Connect program will be expanded

For northbound trading, eligible stocks will include constituent stocks of the Shanghai Stock Exchange A Share Index and the Shenzhen Stock Exchange Composite Index with a market capitalization of 5 billion yuan ($716.9 million) or above, and that meet certain liquidity criteria.

Stocks of companies listed on the two mainland exchanges that have issued both A shares and H shares will also be included.

For southbound trading, eligible stocks will be expanded to include stocks of foreign companies with primary listings in Hong Kong that are constituents of the Hang Seng Composite Indices and meet relevant criteria.

Also, the scope of southbound eligible stocks under the Shanghai-Hong Kong Stock Connect will be aligned with that under the Shenzhen-Hong Kong Stock Connect to include constituents of the Hang Seng Composite SmallCap Index with a market capitalization of 5 billion Hong Kong dollars ($642 million) or above.

The Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, which started operating in 2014 and 2016, respectively, give mainland and international investors direct access to each other's stock markets.

Preparations for the expansion of eligible stocks will take about three months, and the stock exchanges will announce the official launch date in due course.

Chinese mainland, Hong Kong deepen financial cooperation

Over the past years, various measures have been rolled out to boost connectivity between the Chinese mainland and Hong Kong's financial markets.

For instance, the Northbound Bond Connect was introduced in July 2017, which allows eligible overseas investors to invest in the Chinese mainland's interbank bond market.

The Southbound Bond Connect also commenced in September 2021, allowing Chinese mainland investors to invest in Hong Kong's bond market via connections between financial infrastructure services in both locations.

In September 2021, the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area was officially launched to enable residents in Hong Kong, Macao and nine cities in Guangdong Province to carry out cross-boundary investment in wealth management products distributed by banks in the area.

Earlier this year, ETF Connect was launched, which taps into international investors' growing demand for onshore ETFs, or exchange-traded fund products. ETF Connect refers to the connection allowing domestic and foreign investors to access ETF products listed on the onshore A-share and Hong Kong markets.

（With input from Xinhua)