Member of the National Committee of the Chinese People's Political Consultative Conference and Chairman of Guotai Junan International Holdings Limited, Yan Feng: Appropriately and gradually lowering the access threshold for qualified investors in the Hong Kong Stock Connect

In recent years, the ongoing global geopolitical tensions and rapid changes in the economic and financial landscape have led to a relative decline in the attractiveness of U.S. dollar assets, which has become a consensus in the market. This has further driven global capital to seek new “safe havens.” Chinese assets, supported by the country’s strong economic resilience and breakthroughs in new productive forces, have become a compelling option for accommodating the rebalancing of global capital.

Against this backdrop, Yan Feng, a member of the National Committee of the Chinese People’s Political Consultative Conference and Chairman of the Board of Guotai Junan International Holdings Limited, suggested during this year’s National Two Sessions that promoting the rapid development of the capital market and maintaining market stability should be prioritized as two important tasks. He emphasized seizing the current opportunity in global governance reform, capitalizing on “investing in China” and “China investment” opportunities, deepening the connectivity between the mainland and Hong Kong markets, and achieving stability through openness, development, and reform.

Yan Feng believes that leveraging Hong Kong’s unique market advantages is a crucial strategy for advancing the aforementioned tasks. A more vibrant and stable Hong Kong market will significantly enhance the confidence and willingness of international capital to allocate Chinese assets through connectivity channels, thereby creating a new pattern of mutual support between the two regions, promoting mutual benefits domestically and internationally, and developing in a balanced and healthy manner.

Looking back at 2025, the supportive role of Hong Kong stocks for A-shares has gradually become evident. In the Hong Kong market, the Hang Seng Index and the Hang Seng Technology Index have respectively risen by 27.8% and 23.5%; the total amount raised in the IPO market reached HKD 285.8 billion, regaining the top position globally. In addition to active trading in the secondary market, the average daily transaction volume in the spot market also reached HKD 249.8 billion, an increase of 89.5% year-on-year. The performance of leading Chinese brokerage firms in Hong Kong has seen significant growth, with core business revenues being strongly boosted. In the A-share market, the Shanghai Composite Index and the Sci-Tech Innovation 50 Index have respectively risen by 18.4% and 35.9%, with the total market value breaking the 100 trillion yuan mark for the first time, and the average daily transaction volume reaching 1.7 trillion yuan, an increase of 61.9% year-on-year. The new pattern of dual development between Hong Kong and A-shares is beginning to show results.

Therefore, it is necessary to continue consolidating this positive trend, further explore the potential for collaborative development between the two markets, and promote the optimization of related mechanisms to enhance the capacity and attractiveness of both markets to attract international liquidity. By facilitating the bidirectional flow of incremental funds between the North and South, we can achieve mutual support and collaborative development of the two stock markets.

To this end, Yan Feng proposed four specific suggestions:

First, leverage “China investment” to solidify the market foundation. It is suggested to gradually lower the access threshold for qualified investors in the Hong Kong Stock Connect, expanding the QDII (Qualified Domestic Institutional Investor) and RQDII (Renminbi Qualified Domestic Institutional Investor) mechanisms to individual clients, while ensuring closed-loop fund operations and compliance with foreign exchange management requirements. This move can harness the influence of “China investment,” alleviate the premium/discount issue between A-shares and H-shares, boost market valuations, convert household savings into investments, and enhance residents’ property income, thereby unleashing domestic demand potential.

Second, highlight the “investing in China” theme to attract global capital. Under the premise of controllable risks, enhance the convenience for foreign investors to participate in the mainland market, and promote better alignment of trading rules and risk hedging mechanisms with international standards. Consolidate and further push for the broad inclusion of Chinese assets in major international indices such as MSCI and FTSE Russell. Actively tell the story of China to enhance international market understanding of the economic outlook and investment opportunities in China.

Third, deepen the reform of the market maker system to improve market liquidity and effectiveness. In response to the insufficient market-making function in the mainland and the lack of liquidity in small and mid-cap stocks in Hong Kong, it is suggested to systematically optimize the market-making mechanism in the Shanghai and Shenzhen markets, and study the introduction of a market maker system in Hong Kong stocks to enhance liquidity support, stabilize market valuations and expectations. This is positively significant for restoring the wealth effect in the stock market, stabilizing consumption, and stabilizing the economy.

Fourth, improve the risk prevention and control system to safeguard against systemic risks. Continuously strengthen monitoring and prevention of high-risk areas such as on-exchange and off-exchange leverage, algorithmic trading, high-frequency trading, and cross-border arbitrage. Increase regulatory efforts against illegal private placements and disguised leverage to ensure that market leverage remains within a safe range. At the same time, establish a quantitative trading circuit breaker mechanism to prevent algorithmic resonance from causing irrational market fluctuations. Suppress excessive speculation and capital idling, and prevent the capital market from deviating from the economic fundamentals, leading to disorder.

(Reporter: Sun Xiangfeng, Securities Times)

(Editor: Wen Jing)

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