Member of the National Committee of the Chinese People's Political Consultative Conference Wang Dongsheng Proposes Suggestions at the Two Sessions: Focus on Financial Interconnection and Unification, and Introduces the "New Stock Connect" Concept

The upcoming National Two Sessions are approaching, and reviewing the “14th Five-Year Plan” outline is a key agenda item of great interest. In the first year of the “14th Five-Year Plan,” Wang Dongsheng, member of the Chinese People’s Political Consultative Conference (CPPCC), Vice Chairman of the Agriculture and Rural Affairs Committee, and Chairman of HSBC Hong Kong Shanghai Banking Corporation Limited, mainly focuses on further promoting deep connectivity within the Greater Bay Area, financial support for agricultural development, and other topics. He also offers suggestions on leveraging Hong Kong’s advantages to serve the country’s overall development.

Wang Dongsheng believes that mainland companies continue to actively list in Hong Kong, helping Hong Kong once again become the world’s largest IPO market. The connectivity between the two regions is also deepening. Policies introduced last year allow companies from the Guangdong-Hong Kong-Macao Greater Bay Area to list on the Shenzhen Stock Exchange according to regulations, achieving two-way connectivity of listing entities. Further allowing mainland and Hong Kong investors to participate simultaneously in IPO trading across both markets—creating a more comprehensive “Stock Connect” for the Greater Bay Area—would help deepen financial cooperation between Shenzhen and Hong Kong, enhance the connectivity of the Greater Bay Area financial markets, improve the inclusiveness and adaptability of the domestic capital market system, and promote the internationalization of the Renminbi.

Wang Dongsheng suggests that, from an investment target perspective, in the pilot phase, A+H listed companies could be included in the “Stock Connect,” allowing mainland investors to purchase newly issued shares of A-share companies listed in Hong Kong, and allowing Hong Kong and overseas investors to buy newly issued shares of Hong Kong-listed companies on the Shenzhen Stock Exchange. As the pilot matures, the scope could be expanded to include pre-IPO companies with a market value exceeding 5 billion RMB or HKD. This requirement aligns with the Shenzhen-Hong Kong Stock Connect, facilitating continued trading for investors after subscription.

Regarding qualified investors, the existing Shenzhen-Hong Kong Stock Connect mechanism would be maintained. Hong Kong local and overseas investors participating in domestic IPOs must meet the qualification requirements of the Hong Kong Stock Exchange, while mainland investors participating in Hong Kong IPOs must satisfy the suitability management requirements of the Shenzhen Stock Exchange’s Stock Connect.

On capital arrangements and shareholding ratios, Wang Dongsheng believes that investor funds could be managed within a closed-loop system. For applicable currencies, investors and listed entities on the Shenzhen Stock Exchange could use RMB, while investors and listed entities on the Hong Kong Stock Exchange could use HKD or offshore RMB. Since IPO issuance is not a daily trading activity, there is no need to set daily trading limits. Shareholding ratios could follow the requirements outlined in the “Provisions on the Interconnection Mechanism between the Mainland and Hong Kong Stock Markets.”

On the other hand, regarding the improvement of financial support pathways for climate-adaptive agricultural projects, Wang Dongsheng notes that, in practice, there is room for enhancement in risk identification and funding continuity for climate-adaptive agricultural projects. He recommends improving data and financial risk modeling channels based on the existing “Meteorology+” policy, refining the agricultural climate adaptation indicator system within the current green finance standards, and establishing phased support and market-oriented continuation mechanisms based on risk improvement.