Mainland insurance funds gain HK ETF access, Connect turnover up 61%

The National Financial Regulatory Administration said Tuesday it will support mainland insurance funds investing in Hong Kong ETFs through Southbound Stock Connect, opening a new allocation channel for insurers managing trillions of yuan in assets.

"We warmly welcome the announcement by the NFRA marking a significant development for Stock Connect," said Bonnie Y Chan, chief executive officer at Hong Kong Exchanges and Clearing. "Mainland insurance funds diversifying their asset allocation through Hong Kong ETFs will boost the market's vibrancy and depth."

ETFs have been part of the Connect scheme since 2022. Average daily turnover for Southbound and Northbound ETFs in the first seven months of 2026 reached $5.8 billion and RMB5.1 billion, up 61 percent and 86 percent respectively from a year earlier, HKEX data show. Hong Kong ETF average daily turnover hit $40.6 billion in the period, up 22 percent.

The measure gives mainland insurers — which manage trillions of yuan in assets — a broader allocation channel while deepening Hong Kong's ETF ecosystem. Financial Secretary Paul Chan said Southbound ETF turnover in the first half of 2026 was about 12 times the level in 2022, when ETFs joined the Connect scheme.

The announcement followed a meeting in Beijing where Secretary for Financial Services and the Treasury Christopher Hui, SFC Executive Director of Investment Products Elisa Ng and HKEX's Chan met NFRA Vice Minister Xiao Yuanqi to discuss deepening coordination between the two capital markets.

Chief Executive John Lee thanked the central government and NFRA, saying the measures build on mainland insurers' mature experience investing in Hong Kong stocks through Stock Connect. The National 15th Five-Year Plan supports Hong Kong in consolidating its status as an international financial centre, offshore Renminbi hub and asset management centre, he said.

ETF turnover nearly doubles

Hong Kong has been expanding its exchange-traded product market, nurturing active ETFs and encouraging overseas funds to list cross-border. Average daily turnover of exchange-traded products nearly doubled year on year in 2025 and rose more than 25 percent in the first half of 2026, Paul Chan said, making Hong Kong one of the region's leading hubs for such products.

The policy is a win-win, Paul Chan said, giving mainland insurers broader and more diversified investment channels while driving development of Hong Kong's exchange-traded product market and deepening connectivity between the two capital markets.

The move is expected to channel more mainland capital into Hong Kong-listed ETFs, supporting liquidity and valuations in the city's equity market. For mainland insurers, Hong Kong ETFs offer diversification beyond domestic equities and bonds as they seek higher-yielding assets. The HKSAR government said it is pressing ahead with Hong Kong's first five-year plan and will work with mainland regulators to deepen market cooperation.

This article is for informational purposes only and does not constitute investment advice.