The ETF Connect mechanism between the mainland and Hong Kong officially entered its fourth year last month, with the market receiving another significant policy breakthrough. On August 18, the National Financial Regulatory Administration announced its active support for mainland insurance funds to participate in the Stock Connect mechanism, permitting mainland insurance institutions to directly invest in Hong Kong ETFs through this channel. This move is seen as a crucial step forward for the Connect mechanism, advancing from "fund flow connectivity" to "institutional deepening," following the previous expansion of the ETF Connect scheme.
Data shows that the Hong Kong ETF market's product ecosystem is becoming increasingly comprehensive, with over 220 ETFs currently listed, covering equities, fixed income, commodities, and multi-asset categories. Market liquidity has also improved in tandem, with the average daily turnover of the Hong Kong ETF market reaching approximately HK$40.6 billion in the first seven months of 2026, up 22% year-on-year and accounting for over 14% of the total cash market turnover.
It is worth highlighting that Hong Kong's internationalization and product innovation capabilities continue to strengthen. Currently, eight overseas ETFs have been cross-listed in Hong Kong, with combined assets under management exceeding HK$13 billion. The development of active ETFs has been even more rapid, with over 40 products and assets under management surpassing HK$113 billion, representing a year-on-year growth of more than threefold. As of July 2026, there were 365 eligible northbound ETFs and 31 eligible southbound ETFs; in the first seven months of this year, the average daily turnover of northbound and southbound ETFs was approximately RMB 5.1 billion and HK$5.8 billion respectively, reflecting sustained demand from investors on both sides for cross-border asset allocation.
The Hong Kong Treasury Bureau stated that insurance funds are characterized by long investment horizons, substantial scale, and stable allocation strategies. This policy breakthrough will effectively channel long-term institutional capital into the Hong Kong ETF market, enhancing market depth and product demand. In recent years, Hong Kong Exchanges and Clearing has also been continuously expanding its index ecosystem, having launched the "HKEX Technology 100 Index" and cross-market indices covering the United States, South Korea, and Malaysia, providing a richer foundation for ETF product innovation.
Under the advantages of the "one country, two systems" principle, Hong Kong's role as a "super connector" and "super value-adder" has been further accentuated. With the influx of long-term capital from the mainland, the Hong Kong ETF market is poised to achieve new breakthroughs in asset scale, product diversity, and international connectivity, injecting sustained momentum into the consolidation of Hong Kong's status as an international financial center.