What are the impacts? ,A shares usher in new changes
A-shares ushered in new changes on the 13th. From that day on, the real-time transaction volume of northbound funds will no longer be disclosed.
Recently, Hong Kong Exchanges and Clearing Limited announced that adjustments to the real-time trading volume and daily quota balance of northbound transactions will be officially implemented. Starting from May 13, the real-time transaction volume of northbound funds will no longer be disclosed.
The so-called northbound funds generally refer to the trading funds for buying mainland stock stocks through the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism. It is the result of deepening interconnection between the mainland and Hong Kong capital markets.
In November 2014, stock trading under the Shanghai-Hong Kong Stock Connect was officially launched. The launch of this mechanism marked the starting point of northbound funds. In December 2016, stock trading under the Shenzhen-Hong Kong Stock Connect began, further expanding the scope of northbound capital investment. With the opening of these two "channels", northbound funds continue to flow into A-shares, and their market influence in A-shares is also increasing.
According to data from financial data service provider Wind Information, since the beginning of this year, as of May 10, the net inflow of northbound funds into A-shares was approximately RMB 79.086 billion; since the opening of the Shanghai-Shenzhen-Hong Kong Stock Connect, the net inflow of northbound funds has been RMB 1,847.388 billion.
In April this year, the Shanghai-Shenzhen-Hong Kong Stock Exchange announced simultaneous adjustments to the Shanghai-Shenzhen-Hong Kong Stock Connect trading information disclosure mechanism. Among them, the main arrangements for Shanghai and Shenzhen Stock Connect after adjustments are as follows:
When the daily quota balance is greater than or equal to 30%, "Quota Sufficient" is displayed; when it is less than 30%, the quota balance is announced in real time. After the market closes every day, the total trading volume and number of transactions of Shanghai and Shenzhen Stock Connect, the total trading volume of ETFs, the list of the top ten most actively traded securities on that day and their total trading volume are disclosed, and a summary of the aforementioned data is announced on a monthly and annual basis. On the fifth Shanghai-Shenzhen Stock Connect trading day of each quarter, the total number of individual securities held by Shanghai-Shenzhen Stock Connect investors and the number held by each Hong Kong Clearing participant at the end of the previous quarter are announced.
The above adjustments are carried out in two stages: in the first stage, the Hong Kong Stock Exchange will complete the adjustment of real-time trading information in the Shanghai and Shenzhen stock exchanges; in the second stage, the Shanghai, Shenzhen and Hong Kong Stock Exchanges will simultaneously complete the disclosure adjustments of other trading information. It is expected that in the first stage Implemented three months after completion.
Regarding this adjustment, the relevant person in charge of the Shanghai and Shenzhen Stock Exchanges said that the Shanghai-Shenzhen-Hong Kong Stock Connect transaction information disclosure mechanism arrangement was initially to effectively reveal and remind investors of the usage of trading quotas, but its disclosure frequency and content are inconsistent with the A-share market information disclosure The general habits are different, and they are also different from the common practices in the international mainstream market.
The Shanghai-Shenzhen-Hong Kong Stock Exchange discloses Shanghai-Shenzhen-Hong Kong Stock Connect trading information based on the home-field principle, that is, relevant trading activities should comply with the regulatory provisions and business rules of the place where the transaction occurs, and comprehensively consider the investor structure characteristics and information disclosure practices of the two markets. The mechanism is adjusted.
Yu Mingming, an analyst at Cinda Securities, believes that the new information disclosure arrangement effectively streamlines intraday and after-hours information, aligns the content and frequency of actual disclosures with the current requirements of public funds, and is conducive to maintaining the consistency of overall information disclosure in the market. Improve the compatibility of information disclosure with market development and ensure the fairness of investors’ access to information.
Zhao Dongmei, an analyst at Guoyuan Securities, said that the real-time transaction volume of northbound funds will no longer be disclosed. In the medium to long term, this move will help enhance market stability.
Zhao Dongmei explained that since 2019, there has been a strong consistency between the large net inflow of northbound funds and the rise of A-shares in the same period. This adjustment will help reduce the interference of relevant data on intraday market sentiment and improve the overall stability of the market.
Qu Fang, an investment consultant at Wanlian Securities, said that stopping the disclosure of real-time transaction volume of northbound funds will help stabilize the mentality and expectations of A-share investors. In addition, this move will also help reduce the space for institutional investors, especially quantitative institutions, to operate volatile and leveraged operations, which is conducive to the stable operation of the market.