“We do note a small shift in the
fourth quarter volume profile toward the afternoon session, but it is
too early to determine whether this
is linked to Stock Connect activity,”
“Market reports indicated the
early behavioural change is in the
uptake of northbound trading, with
a growing number of institutional
investors using Stock Connect as
an alternative to QFII for accessing
Other potential links
The lacklustre performance of the
Shenzhen Stock Connect could
potentially damage the launch of
further trading links, something
which has been widely discussed
by industry experts.
Statistics from the Hong Kong
Stock Exchange showed the average
daily trading volume for the first
four weeks following the launch totalled less than 10% of its aggregated quota at just HK$2 billion.
Northbound trading stood at less
than 20% of the allocated quota
totalling HK$2.67 billion in the first
month, while southbound trading
totalled HK$923 million, which was
less than 8% of the allocated quota.
ITG explained in February this
year: “Despite the anticipation, the
addition of Shenzhen to the Hong
Kong Stock Connect program did
little to immediately a;ect volumes
or volume profiles in Hong Kong.”
The firm reported volumes
remained relatively unchanged fol-
lowing the launch of the Shenzhen
Stock Connect in the fourth quarter.
of the launch, around a fifth of the
RMB 13 billion quota, compared
to RMB 6. 8 billion achieved on the
Shanghai link on the same day.
The results represented a stark
contrast to the launch of the Shanghai trading link in 2014, which saw
investors consume the entire RMB
13 billion quota on the first day.
Other results from the launch day
revealed that total shares traded
northbound from Shenzhen stood
at just 163 million while the Shanghai Stock Connect achieved total
shares traded of 587 million.
The statistics on the first day cast
a shadow over the highly anticipated launch of the trading link, and
further figure show the lacklustre
performance has continued into
2017, as volumes remained muted
four weeks after the launch.
“Despite the anticipation, the addition of
Shenzhen to the Hong Kong Stock Connect
program did little to immediately a;ect
volumes or volume profiles in Hong Kong.”