New Policy to Grant Mutual Stock Market Access

April 10, 2014 ought to be a surprise day for both Hong Kong and Shanghai stock markets. Chinese Premier Li Keqiang formally announced on that day, at the Boao Asia Forum, to initiate a pilot policy program of Mutual Stock Market Access (MSMA) between Hong Kong and Shanghai.

This cross-border pilot program of Mutual Stock Market Access (MSMA) between Hong Kong and Shanghai will be allowing mainland individuals to buy Hong Kong stocks directly via Shanghai Stock Exchange (SSE), with a daily net investment quota of RMB10.5 billion and a total net investment quota of RMB 250 billion. Hong Kong and overseas individuals can also buy Shanghai stocks directly via Hong Kong Stock Exchange (HKSE Stock Code: 388.hk), with a daily net investment quota of RMB 13 billion and a total net investment quota of RMB 300 billion. This pilot scheme is expected to launch in October 2014, six months after the official announcement.

Hong Kong SFC (Securities and Futures Commission) imposes additional restrictions that only mainland individuals holding at least RMB 500K in their cash and securities accounts will be accepted to trade under this special pilot scheme. They can only purchase dual-listed shares (for companies issued both A shares and H shares), as well as equities listed in Hang Seng Composite LargeCap Index (HKCLCI) and Hang Seng Composite MidCap Index (HKCMCI), which are mostly blue chips in Hong Kong stock market.

China Securities Regulatory Commission (CSRC), on the other hand, does not impose any capital requirements for investors from Hong Kong. Investors from Hong Kong can purchase dual-listed shares, as well as equities listed in Shanghai SSE180 Index and Shanghai SSE380 Index series.

This cross-border pilot program of Mutual Stock Market Access (MSMA) between Hong Kong and Shanghai, however, is totally different from the scrapped "through-train" program in 2007. Under the new MSMA (Mutual Stock Market Access) scheme, investors have to use RMB directly for investment (thus no currency conversion towards Hong Kong dollar is needed). Investors also do not need to open any cross-border equity or bank accounts, and they can handle trades directly under their existing domestic accounts.

The new Mutual Stock Market Access (MSMA) pilot policy program is the first time that allows individuals to legally flow their money out from mainland China for overseas equities investment. It is therefore an important milestone that can open capital market of mainland China, and also can further promote Renminbi (RMB/CNY) Internationalization. It not only will grow up the liquidity pool of Hong Kong offshore RMB market, it can also facilitate two-way capital fund flows between offshore and onshore RMB markets.

We, Mr China, will give out our more specific analysis soon in this blog, so as to help you capture this golden investment opportunity arise from the special Shanghai-HK Mutual Stock Market Access (MSMA) pilot program.

Our Annual 2013 Internal Audit Review For You

2013 was another exciting year for us. As we expected, this site, Mr China, continued to grow rapidly in 2013. We also publish our yearly internal review report here, as follow:

(1) This site, Mr China, gets a slight drop in Google PageRank, from PR4 to currently PR3. Except that, referral traffics from Google search engine does not drop. We, however, will still try our best to restore our Google PageRank in the rest of the year.

(2) Starting the end of last year, we have extended our donation payment options by accepting crypto-currency, in addition to our existing channels through PayPal or Payza. Check for details here: Acceptable Donation Options.

(3) Taking this opportunity, we hereby wrap up our yearly article popularity. Our 2013 top 5 articles are relating to the below hot topics:

(i) Google AdSense;
(ii) LGFV;
(iii) GDP;
(iv) A50 ETF;
(v) Hong Kong iBond.

The above are our brief 2013 Internal Audit Review. We will surely continue to post similar internal review on this website next year! Thanks for your time reading this, and do enjoy also our above brief introduction about the cross-border pilot policy program of Mutual Stock Market Access (MSMA) between Hong Kong and Shanghai.

Written by: IIAT (Independent Internal Audit Team) of Mr China.


Originated from: Quality Control and Internal Audit Team.